Wright, Brian2012-03-192012-03-192009-08-01https://hdl.handle.net/10986/4220In the long view, recent grain price volatility is not anomalous. Wheat, rice, and maize are highly substitutable in the global market for calories, and when aggregate stocks decline to minimal feasible levels, prices become highly sensitive to small shocks, consistent with storage models. In this decade, stocks have declined due to high income growth and biofuels mandates. Recently, shocks including the Australian drought and biofuels demand boosts due to the oil price spike were exacerbated by a sequence of trade restrictions by key exporters beginning in the thin global rice market in the fall of 2007, which turned market anxiety into panic. To protect vulnerable consumers, countries intervened in storage markets and, if they were exporters, to limit trade access. Recognizing these realities, vulnerable countries are building strategic reserves. The associated expense and negative incentive effects can be controlled if reserves have quantitative targets related to the consumption needs of the most vulnerable, with distribution to the latter only in severe emergencies. More-ambitious plans manipulate world prices via buffer stocks or naked short speculation to keep prices consistent with fundamentals. Past interventions of either kind have been expensive, ineffective, and generally short-lived. Further, there is no significant evidence that prices do not reflect fundamentals, including export market access.CC BY 3.0 IGOACCOUNTINGACCUMULATION OF DEBTAGGREGATE SUPPLYAGRICULTURAL COMMODITIESAGRICULTURAL COMMODITYAGRICULTUREARBITRAGEAVERAGE PRICEBEHAVIOR OF PRICESBIDCALL OPTIONCAPITALIST ECONOMIESCARTELCASH INFLOWCOMMODITIESCOMMODITYCOMMODITY PRICECOMMODITY PRICESCOMPETITIVE MARKETCONSUMERSCONSUMPTION INCREASESCONSUMPTION LEVELSCORN PRICECOST INCREASESCOST OF CAPITALDEBTDEMAND CURVEDEMAND GROWTHDEPOSITSDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDOMESTIC MARKETDOMESTIC PRICEDOMESTIC PRICESDUMPINGECONOMIC ORDERECONOMICS RESEARCHEMERGING ECONOMIESENERGY PRICEENERGY PRICESEXCHANGE RATEEXCHANGE RATE MOVEMENTSEXISTING GOVERNMENTEXPECTED RETURNSEXPECTED VALUEEXPENDITUREEXPENDITURESEXPORT MARKETEXPORTEREXPORTERSEXPORTSFINANCIAL FLOWSFINANCIAL MARKETSFINANCIAL SECTORFIXED INTERESTFIXED INTEREST RATEFLOOR PRICEFLOOR PRICESFOOD PRICEFOOD PRICESFORECASTSFREE MARKETFUND INVESTMENTFUTURESFUTURES CONTRACTSFUTURES MARKETFUTURES MARKETSGLOBAL CAPITALGLOBAL MARKETGLOBAL MARKETSGLOBALIZATIONGOVERNMENT EXPENDITUREGOVERNMENT FUNDSGOVERNMENT REVENUEHEDGE FUNDSHEDGESHOLDINGHOLDINGSHOUSING MARKETHUMAN CAPITALINCENTIVE EFFECTSINCOMEINCOME GROWTHINCOMESINFLATIONINSURANCEINTEREST COSTSINTEREST RATEINTEREST RATE POLICIESINTEREST RATESINTERNATIONAL BANKINTERNATIONAL COOPERATIONINTERNATIONAL DEBATESINTERNATIONAL ECONOMYINTERNATIONAL FINANCEINTERNATIONAL MARKETINTERNATIONAL MARKETSINTERNATIONAL RESERVESINTERNATIONAL TRADEINVESTMENT BEHAVIORINVESTMENT VEHICLESLIQUIDITYMARGINAL COSTMARGINAL VALUEMARKET ACCESSMARKET BEHAVIORMARKET CONDITIONSMARKET DEMANDMARKET ENVIRONMENTMARKET FAILUREMARKET INSTABILITYMARKET PARTICIPANTSMARKET PRICEMARKET PRICESMARKET REGULATIONMARKET STABILIZATIONMARKET STOCKSMARKET VOLATILITYMARKETINGMARKETING BOARDSMATURITIESMONOPOLIESMONOPOLYOIL PRICEOIL PRICESOPTIMIZATIONOPTIONS MARKETSOUTPUTPETROLEUM PRICESPOLICY RESPONSESPORTFOLIOPORTFOLIO ALLOCATIONPRICE BANDPRICE BEHAVIORPRICE CEILINGPRICE CHANGESPRICE EFFECTPRICE FLOORPRICE FLUCTUATIONSPRICE INCREASEPRICE INCREASESPRICE INDEXPRICE INDEXESPRICE MOVEMENTSPRICE RISKPRICE SERIESPRICE STABILIZATIONPRICE SUPPORTPRICE TRENDSPRICE VOLATILITYPRIVATE MARKETPRODUCTION COSTSPRODUCTION EFFICIENCYPUBLIC BUDGETSPUBLIC SALESPUBLIC STOCKPUBLIC STOCKSRANDOM WALKRESERVERETURNSRISK­NEUTRALSALESALESSMOOTHING CONSUMPTIONSPOT MARKETSPOT PRICESSTOCK ADJUSTMENTSSTOCK DATASTOCKSSTORAGE CAPACITYSUBSTITUTESUBSTITUTIONSUPPLIERSUPPLIERSSUPPLY SHOCKSUPPLY SHOCKSSURPLUSESTAXTAX POLICIESTRADE BARRIERSTRADE POLICYTRADINGTRADING VOLUMETRANSACTIONTRANSACTION COSTSTRANSPARENCYVOLATILITYWEALTHWORLD MARKETSWORLD TRADEWORLD TRADE ORGANIZATIONWTOWorld Bank10.1596/1813-9450-5028