Volatility of Rapeseed and Oil Prices Amid War in Ukraine

Purpose: The purpose of this article is to examine the impact of the war on the volatility of rapeseed and oil prices in the EU and to determine the impact of oil prices on rapeseed prices during the war. Design/Methodology/Approach: Price changes were determined using the volatility index and coefficient of variation, and the impact of oil prices on rapeseed prices was assessed using the VAR (vector autoregression) model. Findings: The study showed that (1) rapeseed prices reacted with stronger increases than oil prices to Russia's invasion of Ukraine; (2) the volatility of rapeseed prices was significantly higher after the outbreak of war than before it, while the volatility of oil prices decreased during the same period. The limited impact of oil prices on rapeseed prices was also demonstrated. Practical Implications: The Russian invasion of Ukraine was a shock to the global economy in terms of geo-politics, food, and energy. Both countries are world leaders in grain and oilseed exports, and Russia is also a major oil producer. The EU is a net importer of rapeseed, which is largely used for energy purposes (biodiesel production). Ukraine is a major supplier of rapeseed to the EU. Originality/Value: Geo-political, environmental, and economic issues have led to an increase in the use of cereals, oilseeds, and sugar crops, mainly for biofuel production. Rapeseed is the primary feed-stock for the production of esters used in the EU to make biodiesel.