Global Wheat Price Shocks and Firm-Level Export Price Setting

We study how global wheat market shocks transmit to export prices of pasta and related wheat based products. We first estimate a Bayesian structural vector autoregression for the world wheat market using annual data from 1970 to 2022 on production, inventories, real wheat prices, and global economic activity. The model yields structural shocks that capture unexpected shifts in wheat supply, global activity, consumption demand, and inventory demand. We then link these shocks to Italian customs microdata on export unit values by firm, product, and destination from 2004 to 2022, controlling for firm, product, destination, and market conditions. We find economically meaningful pass through from global wheat price movements driven by demand and inventory forces, while supply shocks have weaker and slower effects. Price responses are asymmetric, with larger adjustments following positive shocks than negative shocks. Heterogeneity analyses suggest smaller pass through for firms that import wheat directly, consistent with input sourcing and risk management dampening exposure. The results highlight the role of global commodity shocks in food price formation and the importance of firm level strategies in buffering international price volatility.