The role of storage dynamics in annual wheat prices. (28th April 2017)

• Record Type: Journal Article
• Authors: Schewe, Jacob; Otto, Christian; Frieler, Katja
• Is Part Of: Environmental research letters. Volume 12:Number 5(2017:May)
• Publication Date: 2017-04-28
• Subjects: price variability -- food security -- supply shocks -- trade policy -- climate change; Environmental sciences -- Periodicals; Human ecology -- Research -- Periodicals; Environmental health -- Periodicals; 333.7
• DOI: 10.1088/1748-9326/aa678e
• Languages: English
• ISSNs: 1748-9326

Abstract

Abstract: Identifying the drivers of global crop price fluctuations is essential for estimating the risks of unexpected weather-induced production shortfalls and for designing optimal response measures. Here we show that with a consistent representation of storage dynamics, a simple supply–demand model can explain most of the observed variations in wheat prices over the last 40 yr solely based on time series of annual production and long term demand trends. Even the most recent price peaks in 2007/08 and 2010/11 can be explained by additionally accounting for documented changes in countries' trade policies and storage strategies, without the need for external drivers such as oil prices or speculation across different commodity or stock markets. This underlines the critical sensitivity of global prices to fluctuations in production. The consistent inclusion of storage into a dynamic supply-demand model closes an important gap when it comes to exploring potential responses to future crop yield variability under climate and land-use change.