LONG-TERM DRIVERS OF WHEAT AND MAIZE COMMODITIES PRICES

Abstract

In the last decades prices of agro-food commodities have a tendency of explosive growth. This increase quite usually is related with biofuels development. However, the prices of commodities are influenced by the set of different variables, i.e. supply and demand factors. In order to provide appropriate policy recommendations for agro-culture there is a need to evaluate the factors and their impact on agro-food commodities. This paper uses the multi regression model in order to analyze long-term drivers of annual world wheat and maize commodities prices. Analysis involves both demand (direct: biofuels production, commodities stock in the end of the period; indirect: the exchange rate, the interest rate, gross domestic product) and supply (price of crude oil) factors. The empirical results indicate that the main price drivers of wheat are crude oil prices, exchange rate and stock of wheat lagged one period. While the main maize price drivers are crude oil price and stock of maize lagged one period.

Keywords: long-term drivers, price of wheat commodities, price of maize commodities.

Article DOI: http://doi.org/10.15544/RD.2015.129