Haniotis, TassosBaffes, John2012-03-192012-03-192010-07-01https://hdl.handle.net/10986/3855The 2006-08 commodity price boom was one of the longest and broadest of the post-World War II period. Apart from strong and sustained economic growth, the recent boom was fueled by numerous factors, including low past investment in extractive commodities, weak dollar, fiscal expansion, and lax monetary policy in many countries, and investment fund activity. At the same time, the combination of adverse weather conditions, the diversion of some food commodities to the production of biofuels, and government policies (including export bans and prohibitive taxes) brought global stocks of many food commodities down to levels not seen since the early 1970s. This in turn accelerated the price increases that eventually led to the 2008 rally. The weakening and/or reversal of these factors coupled with the financial crisis that erupted in September 2008 and the subsequent global economic downturn, induced sharp price declines across most commodity sectors. Yet, the main price indices are still twice as high compared to their 2000 real levels, begging once more the question about the real factors affecting them. This paper concludes that a stronger link between energy and non-energy commodity prices is likely to be the dominant influence on developments in commodity, and especially food, markets. Demand by emerging economies is unlikely to put additional pressure on the prices of food commodities. The paper also argues that the effect of biofuels on food prices has not been as large as originally thought, but that the use of commodities by financial investors (the so-called "financialization of commodities") may have been partly responsible for the 2007/08 spike. Finally, econometric analysis of the long-term evolution of commodity prices supports the thesis that price variability overwhelms price trends.CC BY 3.0 IGOAGRICULTURAL COMMODITIESAGRICULTURAL COMMODITYAGRICULTURAL PRICEAGRICULTURAL PRICESAPPROACHASSET MANAGERSASSET PRICESAVAILABILITYAVERAGE PRICEBACKBONEBANDWIDTHBARRELS PER DAYBARTERBUFFER STOCKSCENTRAL BANKCEREAL PRICESCOFFEE PRICESCOMMERCECOMMERCIAL ACTIVITYCOMMERCIAL BANKCOMMODITIESCOMMODITYCOMMODITY BOOMCOMMODITY BOOMSCOMMODITY EXCHANGESCOMMODITY FUTURESCOMMODITY INDEXCOMMODITY MARKETCOMMODITY MARKETSCOMMODITY PRICECOMMODITY PRICE INDEXCOMMODITY PRICE INDICESCOMMODITY PRICESCOMMODITY PRODUCERSCOMMODITY SECTORSCOMMODITY TRADINGCOTTON PRICESCRUDE OILCRUDE OIL PRICECURRENCYDEBTDEMAND GROWTHDEVELOPING COUNTRIESDEVELOPING COUNTRYDIVERSIFICATION BENEFITSDOMESTIC MARKETSECONOMIC ACTIVITYECONOMIC COOPERATIONECONOMIC CRISISECONOMIC DEVELOPMENTECONOMIC DOWNTURNEFFICIENT MARKETEMERGING ECONOMIESENERGY MARKETSENERGY PRICEENERGY PRICESENVIRONMENTAL BENEFITSEQUILIBRIUM PRICEEQUITIESETHANOLETHANOL PRODUCTIONEXCESS LIQUIDITYEXCHANGE MARKETEXCHANGE MARKETSEXCHANGE RATEEXCHANGE RATESEXPENDITURESFEEDSTOCKFEEDSTOCKSFINANCIAL CRISISFINANCIAL INSTITUTIONSFINANCIAL MARKETSFINANCIAL TRANSACTIONSFOOD COMMODITIESFOOD COMMODITYFOOD PRICEFOOD PRICESFOSSILFOSSIL FUELFOSSIL FUEL USEFUELFUEL CONSUMPTIONFUEL PRODUCTIONFUND MANAGERSFUTURE PRICEFUTURESFUTURES CONTRACTFUTURES MARKETFUTURES MARKETSFUTURES TRADINGGAS COMPANIESGASOLINEGASOLINE PRICESGLOBAL ECONOMIC PROSPECTSGLOBAL ECONOMYGLOBALIZATIONGOVERNMENT INTERVENTIONGOVERNMENT POLICIESGREENHOUSE GASESGROWTH RATESHEDGE FUNDHEDGE FUNDSHEDGINGHIGH ENERGY INTENSITYINCOMEINCOMESINFLATIONINSURANCEINTEREST RATEINTEREST RATESINTERNATIONAL COCOA AGREEMENTINTERNATIONAL COMMODITY AGREEMENTSINVENTORIESINVESTMENT PORTFOLIOSINVESTMENT VEHICLEINVESTMENT VEHICLESINVISIBLE HANDLIMITS TO GROWTHLIQUID ASSETSMANUFACTURINGMARKET CONDITIONSMARKET DEVELOPMENTSMARKET EFFICIENCYMARKET FAILUREMARKET INEFFICIENCIESMARKET INTEGRATIONMARKET MANIPULATIONMARKET PRICEMARKET PRICESMARKET VOLATILITYMARKETINGMONETARY POLICYNATURAL GASNEW TECHNOLOGYNITROGENNITROGEN FERTILIZEROIL MARKETSOIL PRICESOIL PRODUCTIONOIL SHOCKSOIL SPILLSOILSOUTPUTOUTPUTSPDFPENSIONPENSION FUNDSPETROLEUMPETROLEUM PRICESPORTFOLIOPORTFOLIOSPRICE BEHAVIORPRICE CHANGESPRICE DISCOVERYPRICE FORECASTPRICE INCREASEPRICE INCREASESPRICE INDEXPRICE INDICESPRICE LEVELSPRICE MOVEMENTSPRICE OF OILPRICE SERIESPRICE SPIKESPRICE STABILIZATIONPRICE TRENDSPRICE VOLATILITYPRICES OF ENERGYPRIMARY COMMODITIESPRIMARY COMMODITYPRODUCTION OF ETHANOLPRODUCTIVITYPUBLIC POLICYR&DRAW MATERIALSREAL ESTATERENEWABLE ENERGYRESULTRESULTSRETAILSEARCHSECURITIESSECURITY CONCERNSSOYBEAN OILSPECULATIVE BUBBLESPOT PRICESPREADSTOCKSSTORAGE FACILITIESSUBSTITUTESUPPLY SHOCKSTARGETSTIME PERIODTRADING ACTIVITIESTRANSACTIONTRANSMISSIONUSESVOLATILITYWEBWEBLOGWORLD ECONOMYWORLD MARKETWORLD TRADEWorld Bank10.1596/1813-9450-5371