Is There a Dangerous Liaison Between Food and Fuel? : Evidence from the CBOT Futures Market

• Autorzy: Giovani Ferri , Giuseppe Patruno , Giovani Pesce
• Języki publikacji: EN

Abstrakty

EN

During 2007-2008 the price per barrel of oil almost tripled and then dropped back to its initial levels. It was argued that the common oscillation in the price of wheat might depend on its increasing use to make bio-fuel. In turn, the abrupt raise in the price of wheat made foodstuffs relatively more expensive vis-r-vis other goods and, since food absorbs a larger share of the consumption basket for poor countries (households), worries surfaced on inequality and poverty. Being oil an exhaustible re- source, those worries - now abated by the global crisis - could come back when the world economy will recovers: the price of wheat might be pushed up again by a new surge in the price of oil. But is this co-movement between the two prices a spurious correlation or is it really driven by a causal nexus going from the price or oil to the price of wheat? To answer this question we employ data from CBOT futures prices - from the beginning of November 1998 to mid January 2009 - and develop a novel identification strategy. Via event study methodology we check whether wheat prices have increased based on negative events - when OPEC meetings set oil production below expecta- tions - and decreases because of positive events - and when OPEC meetings set oil production above expectations. While we failed to detect any significant change in the price of wheat around negative events, we do find that the price of wheat decreased significantly on the occasion of positive oil price events. Though caution is in order considering the small number of positive events, our evidence sug- gests a causal link going from oil prices to wheat prices. This appears consistent with the conjecture that bio-fuels are indeed providing a link between the two markets. The worries on poverty seem germane. (original abstract)

Słowa kluczowe

EN

Food; Alternative fuels; Market; Biofuels; Event study

PL

Żywność; Paliwa alternatywne; Rynek; Biopaliwa; Analiza zdarzeń

• Czasopismo: Zeszyty Naukowe Uniwersytetu Szczecińskiego. Finanse, Rynki Finansowe, Ubezpieczenia
• Rocznik: 2009
• Numer: nr 16
• Strony: 279--290

Twórcy

autor

Giovani Ferri

• University of Bari Aldo Moro, Italy

autor

Giuseppe Patruno

• University of Bari Aldo Moro, Italy

autor

Giovani Pesce

• University of Bari Aldo Moro, Italy

Bibliografia

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