Determination Basis for the Level and Volatility of Agricultural Commodity Prices in International Markets - Implications for World Nutrition and Policy Formulation

The price development of agricultural commodities is above all the result of fundamental supply and demand. Although the price-driving and price-destabilising contribution of speculation is often maintained, it is not verified empirically. On the contrary: Speculation ensures the requisite liquidity for safeguarding of the hedging business of farmers, dealers and processors, improves the price production function of commodity future markets due to the increasing number of participants and is therefore a necessary side effect of volatile markets. Biofuels are also only to be held responsible for higher and more volatile prices in conjunction with other significant influential factors. The separate influence is difficult to ascertain with the previous model approaches. And long-term, comparatively moderate effects of biofuels result on the price level and price volatility. Other factors play a much greater role there, such as the weather, income and population development, dietary habits, technical progress, the macroeconomic environment and not least the future course set by trade policies.