2011 has seen continuing fluctuations in the international price of agricultural commodities such as wheat, maize, soybeans, and corn. These staples often make up the bulk of the diet of the world’s poor; thus, any drastic change in the price of these commodities can have serious impacts on the economic stability and food security of the developing world. The fear and uncertainty surrounding changing commodities prices panic policy responses that only exacerbate food insecurity.
Tracking commodities prices is crucial in food market information systems. Looking for indications regarding expected food prices, analysts resort to futures markets in a number of countries where quotations are available for prices at specific days and for specific qualities. A study by Manuel Hernandez and Maximo Torero ( Hernandez and Torero 2010 ) examines the dynamic relationship between spot and futures prices for agricultural commodities. The results indicate that spot prices are generally discovered in futures markets. In particular, the authors find that changes in futures prices lead to changes in spot prices more often than the reverse.
In addition, having an early warning system that identifies when price spikes are mere abnormalities (and thus not expected to last) can help policymakers react more appropriately to address such changes. The Food Security Portal’s Agricultural Commodities Prices and Returns tool provides up-to-date global weekly price data and daily returns of future price data for five major agricultural commodities (hard wheat, soft wheat, soybeans, maize, and rice), while the Annotated Agricultural Commodities Prices tool provides additional information regarding commodities prices such as international exchange rates, global oil prices, and major food security news headlines.
Watch Senior IFPRI Researcher and University of Colorado Professor Carlos Martins-Filho discuss the research behind the Food Security Portal’s Agricultural Commodity Returns tool.
Listen as Senior IFPRI Research Fellow David Orden discusses what is behind rising commodities prices on the Diane Rehm show.