Haniotis, TassosBaffes, John2016-03-102016-03-102016-03https://hdl.handle.net/10986/23927After 2005, commodity prices experienced their longest and broadest boom since World War II. Agricultural prices have now come down considerably since their 2011 peak, but are still 40 percent higher in real terms than their 2000 lows. This paper briefly addresses the main arguments on the causes of the agricultural price cycle. It broadens the scope of analysis by focusing on six agricultural commodities, and identifies the relative weights of key quantifiable drivers of their prices. It concludes that increases in real income negatively affect real agricultural prices, as predicted by Engel's Law. Energy prices matter most (not surprisingly, given the energy-intensive nature of agriculture), followed by stock-to-use ratios and, to a lesser extent, exchange rate movements. The cost of capital affects prices only marginally, probably because it not only influences demand, but also evokes a supply response.en-USCC BY 3.0 IGOFOOD PRICEMARKET DEVELOPMENTSMONETARY POLICYUNCERTAINTIESPRICE LEVELSFOREIGN INVESTMENTPRICE INCREASESDEVELOPING COUNTRIESCOST OF CAPITALSTOCKENERGY PRICESMARKET DEVELOPMENTSINFORMATION SYSTEMSECURITY CONCERNSPRICE UNCERTAINTIESINCOMEINTERESTPURCHASING‐POWERCOMMODITY PRICEEMERGING ECONOMIESINTEREST RATEEXCHANGETREASURIESDEVELOPING COUNTRIESPRODUCER PRICESFOOD PRICESPRICE INDICESFISCAL POLICYEXCHANGE RATEPRICEMARKET FAILURESUPPLY SCHEDULEPRICE TRENDASSET VALUESINTEREST RATETREASURY BILLSUPPLY SCHEDULESPRICE VOLATILITYINFLATIONPRICE INCREASESDEVELOPING COUNTRYPRICE VARIATIONCENTRAL BANKMARKET PARTICIPANTSASSET VALUESPUBLIC POLICYNATURAL GAS PRICESPRICE INDICESGLOBAL ECONOMYINFORMATION SYSTEMAGRICULTURAL COMMODITIESCURRENCYDEVELOPMENT ECONOMICSEXCHANGE RATE MOVEMENTSRESERVE BANKEMERGING ECONOMIESPRICE VOLATILITYFOOD PRICEINFLATIONARY PRESSURESPRODUCTSEXCHANGE RATESINTEREST RATESMARKET FAILURESPUBLIC POLICYNATURAL DISASTERSDEBTMARKETINGMARKETSINTEREST RATESBORROWING COUNTRIESAGRICULTURAL PRICESEXCHANGE RATE MOVEMENTSSUPPLY SCHEDULESPRODUCTAGRICULTURAL PRICENATURAL RESOURCESINVENTORYAGRICULTURAL PRICESCOMMODITY PRICEMARKET PRICEPRICE INFLATIONEXPENDITURECOMMODITY‐PRICECONSUMPTIONFEDERAL RESERVEPRICE TRENDSFEDERAL RESERVE BANKPOLICIESVOLATILITYMARKET FAILURESFINANCIAL CRISISSTANDARD OF LIVINGAGRICULTURAL PRICEFUTUREGLOBAL ECONOMYVALUEPOLICY MAKERSFOREIGN INVESTMENTDEMANDAGGREGATE DEMANDNOMINAL INTEREST RATESPRICE LEVELCONSUMER PRICEPRICE CHANGESINCOMESPRICES INDEXPRICE FLUCTUATIONSEXCHANGE RATESBORROWING COUNTRIESFEDERAL RESERVEDEMAND GROWTHCEREAL PRICESMARKETENERGY PRICESPOLICYTREASURYPRICE MOVEMENTSINSURANCECURRENCIESCOMMODITY PRICESECONOMIC DEVELOPMENTTRADEMARKET FAILURENATURAL GASCOST OF CAPITALSECURITYSTOCKSINVESTMENTCOALSUPPLYPURCHASINGINSURANCE MECHANISMSCOMMODITY MARKETSPOWER‐PARITYFEDERAL RESERVE BANKINVESTMENTSCONSUMER PRICE INDEXPRICE INDEXPRICE OF COALNOMINAL INTEREST RATESTOTAL DEMANDCOMMODITIESEXCHANGE RATEPRICE LEVELSFOOD PRICESPRICE MOVEMENTSPRICE INDEXFEDERAL RESERVE BANKCOMMODITY PRICESCOMMODITYPRICESENERGY PRICECOST OF CAPITALSUPPLY SCHEDULESTORAGEWorking PaperWorld Bank10.1596/1813-9450-7589