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World Wheat Price Volatility: Selected Scenario Analyses

Author

Listed:
  • Wyatt Thompson

    (University of Missouri)

  • Garry Smith

    (OECD)

  • Armelle Elasri

    (OECD)

Abstract

This study complements OECD analyses on commodity price volatility by providing quantitative assessments of the impact of two structural changes that a number of market observers have identified as contributing to world wheat market price volatility. The factors examined relate to changes in demand in the large emerging countries of the BRICs (comprising Brazil, the Russian Federation, India and China), as a result of continuing economic growth and development and the effect of a lower levels of global wheat stocks in recent years. A further scenario extends the analysis of the role of stocks in price volatility by examining some effects of a hypothetical international buffer stockholding scheme to stabilise international wheat prices. Each scenario was undertaken with the Aglink-Cosimo model and the stochastic baseline as reported in the OECD-FAO Agricultural Outlook, 2011-2020. The results suggest that both factors have contributed to the recorded volatility in world wheat markets in recent years. However the increase in market volatility arising from economic development and income growth is likely to occur gradually, while the moderating effect of larger stocks may only be fleeting. The stylised wheat buffer stock scheme with a price band may lead to slightly lower market volatility under highly specific conditions and constraining assumptions. These, however, have proven difficult to achieve and sustain in practice, as observed from past attempts to implement such schemes.

Suggested Citation

  • Wyatt Thompson & Garry Smith & Armelle Elasri, 2012. "World Wheat Price Volatility: Selected Scenario Analyses," OECD Food, Agriculture and Fisheries Papers 59, OECD Publishing.
  • Handle: RePEc:oec:agraaa:59-en
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    File URL: http://dx.doi.org/10.1787/5k8zpt62fs32-en
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    Cited by:

    1. El Chami, D. & Knox, J.W. & Daccache, A. & Weatherhead, E.K., 2015. "The economics of irrigating wheat in a humid climate – A study in the East of England," Agricultural Systems, Elsevier, vol. 133(C), pages 97-108.
    2. Santeramo, Fabio Gaetano & Lamonaca, Emilia & Contò, Francesco & Stasi, Antonio & Nardone, Gianluca, 2017. "Drivers of grain price volatility: a cursory critical review," MPRA Paper 79427, University Library of Munich, Germany.

    More about this item

    Keywords

    buffer stocks; price; scenarios; simulation; stochastic simulations; variability; volatility; wheat;

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