Oil prices drive grain prices, says new UN study

December 16, 2013 |

In Italy, oil prices, not ethanol, were the main drivers of grain prices in a new study from the UN Food and Agriculture Organization (FAO). While ethanol moves in line with oil in the long term, the relationship between ethanol and oil prices between 1980 and 2012 has been nonlinear in the short term. The study also implies that a 10% rise in oil prices will result in the price of ethanol going up 4.5% in the long term, while a 10% rise in ethanol price lifting corn by 14% of the study. Ethanol prices respond to changes in oil prices in around 4 months, according to the research. Corn prices take longer, around 17 months to fully adjust.

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Category: Research

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