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Do oil prices drive agricultural commodity prices? Evidence from South Africa

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  • Fowowe, Babajide

Abstract

The global economy has witnessed a concurrent rise in oil prices and agricultural commodities prices and this has generated interest in understanding the energy-food nexus. Many studies have attributed the rise in agricultural commodity prices to the role of world oil prices. Similar to global oil prices, South Africa experienced a surge in agricultural commodity prices from 2004 and reached a peak in 2008. This study conducts an empirical investigation of the effects of oil prices on agricultural commodity prices in South Africa. Structural breaks cointegration tests showed no evidence of a long-run relationship between oil prices and agricultural commodity prices in South Africa. Nonlinear causality tests showed no evidence that agricultural commodity prices in South Africa respond to oil prices. The results show that agricultural commodity prices in South Africa are neutral to global oil prices.

Suggested Citation

  • Fowowe, Babajide, 2016. "Do oil prices drive agricultural commodity prices? Evidence from South Africa," Energy, Elsevier, vol. 104(C), pages 149-157.
    • Handle: RePEc:eee:energy:v:104:y:2016:i:c:p:149-157
    DOI: 10.1016/j.energy.2016.03.101
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