The Impact of the Oil Sector on Commodity Prices: Correlation or Causation?

By S. Saghaian. Journal of Agricultural and Applied Economics, 2010

227 citations recorded by the source corpus.

The interconnections of agriculture and energy markets have increased through the rise in the new biofuel agribusinesses and the oil-ethanol-corn linkages. The question is whether these linkages have a causal structure by which oil prices affect commodity prices and through these links, instability is transferred from energy markets to already volatile agricultural markets. In this article, we present empirical results using contemporary time-series analysis and Granger causality supplemented by a directed graph theory modeling approach to identify the links and plausible contemporaneous causal structures among energy and commodity variables. The results show that although there is a strong correlation among oil and commodity prices, the evidence for a causal link from oil to commodity prices is mixed.

Subfields: Economics and Econometrics, Environmental Engineering

View Paper: https://www.semanticscholar.org/paper/9dc6c56971cdd75c314af39c179721c2cc5d9ae0

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Citations in the corpus

World oil and agricultural commodity prices: Evidence from nonlinear causality (2011, background): “Nevertheless, it is argued that the volatile agricultural price dynamics during the recent years compared with the past are attributed to the instability of the energy prices (Saghaian, 2010).”
Correlations between biofuels and related commodities before and during the food crisis: A taxonomy perspective (2012, result): “Similar results are reported by Saghaian (2010) who shows that corn price Granger-causes price of ethanol with statistical significance on all conventional levels, but the reversed direction of Granger causality is statistically significant only on 10% significance level that disappers quite…”
Time-frequency contained co-movement of crude oil and world food prices: A wavelet-based analysis (2017, background): “…and corn-basedbiofuels, that in turn increase the demands of both feedstocks, i.e., corn and soybeans, and thereby boosts their prices (Cha and Bae, 2011; Chen et al., 2010; De Nicola et al., 2016; Mitchell, 2008; Natanelov et al., 2013; Obadi and Korcek, 2014; Saghaian, 2010; Tyner, 2010).”
An Overview of Global Wheat Market Fundamentals in an Era of Climate Concerns (2017, background): “Saghaian [41], Esmaeili and Shokoohi [42], Natanelov et al.”
Biofuel-related price transmission literature: A review (2013, background): “Out of these, ten focus on the US biofuel market (Campiche et al., 2007; Cha and Bae, 2011; Chang and Su, 2010; Mallory et al., 2012; McPhail, 2011; Qiu et al., 2012; Saghaian, 2010; Serra et al., 2011a; Wixson and Katchova, 2012; Zhang et al., 2010).”
The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses (2015, unknown): “Some others find no direct causal link between the prices of energy and non-energy commodities (Saghaian 2010; Gilbert 2010; Zhang et al. 2010; Reboredo 2012.”
THE ROLE OF BIOFUELS IN FOOD COMMODITY PRICES VOLATILITY AND LAND USE (2017, background): “The more recent literature finds weak relationships between energy and non-energy crop prices (Reboredo, 2012; Saghaian, 2010; Zhang, Lohr, Escalante & Wetzstein, 2010).”
Exploring the time-frequency connectedness and network among crude oil and agriculture commodities V1 (2019, methodology): “Only several studies focus on volatility spillovers etween oil and agriculture commodities (Serra, 2011; Ji and Fan, 012; Nazlioglu et al., 2013; Jebabli et al., 2014).”