Recent Commodity Price Movements in Historical Perspective

Important agricultural commodity prices more than tripled from prices observed in 2005 and 2006 to those observed in the spring and summer of 2008. Prices subsequently fell precipitously so that by early November 2008 (and continuing in the subsequent few months), the near-term futures prices of corn, wheat, and soybeans stood about 50–70% higher than before the price run-up began.1 The huge percentage price increases in 2007 and 2008 demanded attention from the press and policymakers concerned about food price increases (Washington Post 2008; Lazear 2008; Glauber 2008). Of even greater concern are impacts on hunger among the poor in poor countries (Benson et al. 2008). Many economists summarized the potential sources of the price jumps and assessed their relative importance (McCalla 2008; Trostle 2008a; OECD 2008). My quick assessment of this literature is that once the specific price changes to be explained and time periods have been standardized, economists are in reasonable agreement about the likely causal factors and their impacts, at least in broad terms. My aims here are modest. I do not attempt to attribute recent price changes to such factors as: (a) biofuels policy; (b) jumps in input costs due to energy price shocks; (c) reduced farm subsidies in Europe; (d) exchange rate movements; (e) growth in demand in developing countries; (f) weather shocks; (g) lack of adequate stocks; (h) border policies in exporting and importing countries; or (i) speculative movements in organized commodity markets,