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Long-term cereal price changes: how important is the speculative element


  • M. Bruna Zolin

    () (Department of Economics, University Of Venice C� Foscari)

  • Bernadette Andreosso O�Callaghan

    () (University of Limerick)


The objective of this article is to provide an analysis of the relationship existing between cereal prices and several variables such as population, income, exports, the exchange rate, and speculation, by using a linear regression analysis. Specific emphasis is placed on the speculative dimension. The methodology used helps us explore the forms of relationships between the different variables, and, more specifically, it gives an insight into the extent of speculation during the recent critical time period. Our results show that speculation (defined by the long position of traders) has played a crucial role during the period June 2001 � December 2009. According to our analysis, speculation it is the most relevant independent variable that affects cereal prices. Exports, in some ways connected to the former variable, occupy second place, in term of significance. However, their impact on cereal prices is less relevant than that of biofuel production. Population growth does not have impact in a positive way on cereal prices; it acts in the opposite direction due to the change in diets, implying that population increases would tend to affect primarily other agricultural markets. Excessive volatility in food prices, as that observed in the last years is a dramatic question. From a demand point of view, consumers in developing countries and vulnerable income groups in other countries (farmers) have to be protected. More than one policy on both international markets and domestic markets have to be introduced so as to lessen food/cereal lower price volatility.

Suggested Citation

  • M. Bruna Zolin & Bernadette Andreosso O�Callaghan, 2010. "Long-term cereal price changes: how important is the speculative element," Working Papers 2010_23, Department of Economics, University of Venice "Ca' Foscari".
  • Handle: RePEc:ven:wpaper:2010_23

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    References listed on IDEAS

    1. Robles, Miguel & Torero, Maximo & von Braun, Joachim, 2009. "When speculation matters:," Issue briefs 57, International Food Policy Research Institute (IFPRI).
    2. Muller, Adrian, 2006. "Sustainable Agriculture and the Production of Biomass for Energy Use," Working Papers in Economics 216, University of Gothenburg, Department of Economics, revised 01 Aug 2008.
    3. Anríquez, Gustavo & Daidone, Silvio & Mane, Erdgin, 2013. "Rising food prices and undernourishment: A cross-country inquiry," Food Policy, Elsevier, vol. 38(C), pages 190-202.
    4. von Braun, Joachim & Pachauri, R. K., 2006. "The promises and challenges of biofuels for the poor in developing countries: IFPRI 2005-2006 Annual Report Essay," Annual report essays 2006Essay, International Food Policy Research Institute (IFPRI).
    5. C. Peter Timmer, 2009. "Did Speculation Affect World Rice Prices?," Working Papers 09-07, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
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    Cited by:

    1. Lawani, Abdelaziz & Reed, Michael & Fiamohe, Rose, 2016. "Impact of Food Reserve Programs on Price Levels and Volatility: Natural Experiment from Benin Rice Market in West Africa," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252860, Southern Agricultural Economics Association.

    More about this item


    cereal prices; future markets and speculation; renewable energy; agricultural demand and supply.;

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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