IDEAS home Printed from https://ideas.repec.org/a/ags/joaaec/92582.html
   My bibliography  Save this article

The Impact of the Oil Sector on Commodity Prices: Correlation or Causation?

Author

Listed:
  • Saghaian, Sayed H.

Abstract

The interconnections of agriculture and energy markets have increased through the rise in the new biofuel agribusinesses and the oil–ethanol–corn linkages. The question is whether these linkages have a causal structure by which oil prices affect commodity prices and through these links, instability is transferred from energy markets to already volatile agricultural markets. In this article, we present empirical results using contemporary time-series analysis and Granger causality supplemented by a directed graph theory modeling approach to identify the links and plausible contemporaneous causal structures among energy and commodity variables. The results show that although there is a strong correlation among oil and commodity prices, the evidence for a causal link from oil to commodity prices is mixed.

Suggested Citation

  • Saghaian, Sayed H., 2010. "The Impact of the Oil Sector on Commodity Prices: Correlation or Causation?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 42(3), pages 1-9, August.
  • Handle: RePEc:ags:joaaec:92582
    DOI: 10.22004/ag.econ.92582
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/92582/files/jaae423ip7.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.92582?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. von Braun, Joachim & Ahmed, Akhter U. & Asenso-Okyere, Kwadwo & Fan, Shenggen & Gulati, Ashok & Hoddinott, John F. & Pandya-Lorch, Rajul & Rosegrant, Mark W. & Ruel, Marie T. & Torero, Maximo & van Rh, 2008. "High food prices: The what, who, and how of proposed policy actions," Policy briefs 1A GR, International Food Policy Research Institute (IFPRI).
    2. Siebert, John W. & Hagerman, Amy D. & Park, John L., 2008. "Virtual Investment Concepts and the Ethanol Industry," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 11(4), pages 1-14, November.
    3. von Braun, Joachim & Torero, Maximo, 2009. "Exploring the Price Spike," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 24(01), pages 1-6.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Unknown, 2008. "The 30-Year Challenge: Agriculture's Strategic Role in Feeding and Fueling a Growing World," Issue Reports 45719, Farm Foundation.
    2. Hassler, John & Sinn, Hans-Werner, 2016. "The fossil episode," Journal of Monetary Economics, Elsevier, vol. 83(C), pages 14-26.
    3. Delphine Boutin, 2011. "D’une crise à l’autre : Mesurer l’impact des prix alimentaires sur la pauvreté," Larefi Working Papers 1106, Larefi, Université Bordeaux 4.
    4. de Fraiture, Charlotte & Molden, David & Wichelns, Dennis, 2010. "Investing in water for food, ecosystems, and livelihoods: An overview of the comprehensive assessment of water management in agriculture," Agricultural Water Management, Elsevier, vol. 97(4), pages 495-501, April.
    5. Jin Guo & Tetsuji Tanaka, 2019. "Determinants of international price volatility transmissions: the role of self-sufficiency rates in wheat-importing countries," Palgrave Communications, Palgrave Macmillan, vol. 5(1), pages 1-13, December.
    6. Kevin D Hall & Juen Guo & Michael Dore & Carson C Chow, 2009. "The Progressive Increase of Food Waste in America and Its Environmental Impact," PLOS ONE, Public Library of Science, vol. 4(11), pages 1-6, November.
    7. Apergis, Nicholas & Rezitis, Anthony N., 2011. "Food Price Volatility and Macroeconomic Factors: Evidence from GARCH and GARCH-X Estimates," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 43(01), pages 1-16, February.
    8. Saswati Bora & Iride Ceccacci & Christopher Delgado & Robert Townsend, 2011. "Food Security and Conflict," World Bank Publications - Reports 9107, The World Bank Group.
    9. Benson, Todd & Minot, Nicholas & Pender, John & Robles, Miguel & von Braun, Joachim, 2013. "Information to guide policy responses to higher global food prices: The data and analyses required," Food Policy, Elsevier, vol. 38(C), pages 47-58.
    10. Xiaoliang Liu & Guenther Filler & Martin Odening, 2013. "Testing for speculative bubbles in agricultural commodity prices: a regime switching approach," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 73(1), pages 179-200, May.
    11. Giovanni Andrea Cornia & Laura Deotti & Maria Sassi, "undated". "Food Price Volatility over the Last Decade in Niger and Malawi: Extent, Sources and Impact on Child Malnutrition," UNDP Africa Policy Notes 2012-002, United Nations Development Programme, Regional Bureau for Africa.
    12. Benson, Todd & Minot, Nicholas & Pender, John L. & Robles, Miguel & von Braun, Joachim, 2008. "Global food crises: Monitoring and assessing impact to inform policy responses," Food policy reports 19, International Food Policy Research Institute (IFPRI).
    13. Rosa, Franco & Vasciaveo, Michela & Weaver, Robert D., 2014. "Agricultural and oil commodities: price transmission and market integration between US and Italy," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 3(2), pages 1-25, August.
    14. Zaremba, Adam & Bianchi, Robert J. & Mikutowski, Mateusz, 2021. "Long-run reversal in commodity returns: Insights from seven centuries of evidence," Journal of Banking & Finance, Elsevier, vol. 133(C).
    15. Berazneva, Julia & Lee, David R., 2013. "Explaining the African food riots of 2007–2008: An empirical analysis," Food Policy, Elsevier, vol. 39(C), pages 28-39.
    16. Vincent H. Smith & Joseph W. Glauber, 2020. "Trade, policy, and food security," Agricultural Economics, International Association of Agricultural Economists, vol. 51(1), pages 159-171, January.
    17. Tanaka, Tetsuji & Guo, Jin & Wang, Xiufang, 2023. "Did biofuel production strengthen the comovements between food and fuel prices? Evidence from ethanol-related markets in the United States," Renewable Energy, Elsevier, vol. 217(C).
    18. Dorosh, Paul A. & Kennedy, Adam & Torero, Máximo, 2016. "El Niño and cereal production shortfalls: Policies for resilience and food security in 2016 and beyond," Policy briefs 978-089629-988-7, International Food Policy Research Institute (IFPRI).
    19. Joachim von Braun & Hans-Joachim Preuß & Christian Henning & Ralf Südhoff & Dieter Kirschke & Astrid Häger, 2008. "Unbezahlbare Nahrungsmittel – stark gestiegene Nachfrage oder Agrarrohstoffe als Anlageklasse: was sind die Ursachen?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 61(11), pages 03-20, June.
    20. Brian D. Wright, 2012. "International Grain Reserves And Other Instruments to Address Volatility in Grain Markets," The World Bank Research Observer, World Bank, vol. 27(2), pages 222-260, August.

    More about this item

    Keywords

    Agribusiness; Crop Production/Industries; Environmental Economics and Policy; Production Economics; Research Methods/Statistical Methods; Resource/Energy Economics and Policy;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:joaaec:92582. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/saeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.