Commodity Price Fluctuations Research Articles

Assessing the impact of the Russia-Ukraine war and COVID-19 on selected European currencies and key commodities

This study measures the spillover effects of the Russia-Ukraine war and the COVID-19 pandemic on currency pairs as the Russian ruble, Czech koruna, Polish zloty, Hungarian forint, Swedish krona, Bulgarian lev, Danish krone, Romanian leu, Ukrainian hryvnia, and Turkish Lira. By employing the TVP-VAR model we investigate the dynamic connectedness among these currencies and key energy and agricultural commodities. The data series encompasses two consecutive non-economic shocks – the Ukraine war and the COVID-19 pandemic – and a preceding period of general stability during 2018 and 2019. The importance of geopolitical context in shaping currency dynamics was present in countries with heavy dependence on Russian gas. The findings indicate a limited direct impact of commodity price fluctuations on the value of these currencies. At the same time, geopolitical decisions primarily related to the Russian Ruble and energy dependencies significantly impacted their valuation. The study reveals the complexity of currency dynamics and the influence of geopolitical risks and global health crises on exchange rate volatility and commodity dependencies.

The Effect of Food Price Stabilization on Inflation in West Nusa Tenggara 2019-2023

One of the primary contributors to the inflation rate in West Nusa Tenggara Province is the fluctuation of prices for food commodities. The objective of this study is to examine the extent to which fluctuations in food commodity prices, including those of rice, red chili, and shallots, contribute to inflationary trends in West Nusa Tenggara. The data used is monthly data on inflation and food commodity prices from 2019-2023 obtained from BPS (Central Bureau of Statistics), DKP (Food Security Agency), and the Agriculture Office of West Nusa Tenggara Province. The analysis method used is vector autoregression (VAR), which includes stationarity test, VAR stability test, optimal lag test, cointegration test, VAR estimation, impulse response function (IRF), and variance decomposition. The results of this study indicate that in the short term premium rice prices, curly red chili prices, and shallots do not affect inflation. Conversely, in the long run, the variable price of shallots does not affect inflation, while the variable price of premium rice and curly red chili prices exert an influence on inflationary pressures in West Nusa Tenggara Province. The Variance Decomposition Test indicates that the price of curly red chili contributes 37.24 percent to inflation in the fifth period, while premium rice has an effect of 8.66 percent on inflation in the second period and shallots have an effect of 7.93 percent on inflation in the fifth period.

ЭКОНОМИЧЕСКИЙ ПОРТРЕТ КАЗАХСТАНА: НОВЫЕ ВЕХИ

Recent years have been marked by steady growth of the Kazakh economy, which is supported by the dynamic development of key sectors and the active introduction of new technologies. In 2024, the country continues to successfully adapt to the changing global economic environment, including commodity price volatility and global economic turmoil. The Kazakh economy has demonstrated steady positive dynamics, which is due to the stable growth of key industries and innovative development. Despite global economic challenges and fluctuations in commodity prices, the country continues to demonstrate adaptability and sustainability of economic growth in 2024. International financial institutions and analytical centers agree that the Kazakh economy will maintain moderate growth rates in 2024. This indicates a gradual recovery from global economic turmoil. An important factor contributing to such development is the diversification of the economy, aimed at reducing dependence on commodity exports and stimulating domestic consumption, infrastructure projects and innovation. The Kazakh government is actively working to improve the country's investment attractiveness, support small and medium-sized businesses and develop human capital. These measures are aimed at ensuring sustainable economic growth and improving the well-being of the population. This article provides an in-depth analysis of the current economic state of Kazakhstan, including the dynamics of GDP and GRP, as well as development prospects.

Interest rate dynamics and commodity prices

In economic studies and popular media, interest rates are routinely cited as a major factor behind commodity price fluctuations. At the same time, the transmission channels are far from transparent, leading to long-running debates on the sign and magnitude of interest rate effects. Purely empirical studies struggle to address these issues because of the complex interactions between interest rates, prices, supply changes, and aggregate demand. To move this debate to a solid footing, we extend the competitive storage model to include stochastically evolving interest rates. We establish general conditions for existence and uniqueness of solutions and provide a systematic theoretical and quantitative analysis of the interactions between interest rates and prices.

Commodity prices and production networks in small open economies

We study the role of domestic production networks in the transmission of commodity price fluctuations in small open economies. First, we present a tractable model of a small open economy's production network to explain sectoral propagation patterns. We demonstrate that the domestic production network is crucial in shaping the propagation of commodity prices. Using a panel of 31 sectors across 9 small open economies, we empirically confirm the model's predictions. Next, we construct a dynamic model of a small open economy featuring a production network to study the macroeconomic importance of the network structure in shaping both aggregate and sectoral responses to commodity price shocks. We show that: (i) the network-adjusted labor share of the commodity sector, rather than the sector's size, is key to understanding the real wage's response to commodity price fluctuations; and (ii) non-unitary elasticities of substitution in production are crucial for understanding the cross-sectional implications of these fluctuations.

Desensitization to commodity price fluctuations by product characteristics.

Little is known about how commodity price fluctuations transmit to the prices of products. In this paper we present a price dynamics model for a product which is in competition with a commodity. The price of the commodity is treated as a stochastic process. Commodity price fluctuations are transmitted to the product price through a demand function which is obtained by aggregating the choices of a consumer population. Importantly, these consumers make their choices on the basis of a utility function which includes a term relating to product characteristics. Numerical simulations show that improved product characteristics tend to suppress the transmission of commodity price fluctuations. We apply our model to a realistic case of monolayer platinum (a product) in competition with platinum metal (a commodity) for adoption by consumers as a catalyst material. While monolayer platinum shows only a minor improvement in catalytic turnover rates for oxygen reduction, the resulting product characteristic improvement is sufficient to effectively eliminate product price fluctuations, at least for the consumer population regime considered here.

Currency Exchange Rate Volatility as a Moderating Effect of the Gold and Coal Price Against Fund Age and Mutual Fund in Indonesia

Abstract Shifts in gold and coal prices have a crucial impact on the macro economy, especially investment growth. On a financial scale, there is still little discussion of the relationship between gold and coal prices and stock mutual funds. Also, the role of exchange rates and interest rates in moderating this relationship has not been examined. This research reviews the performance of exchange-traded funds (ETFs) in the scope of fund age and Indonesian stock mutual funds which are influenced by gold and coal prices with the moderating effect of interest rates and exchange rates. Core data was obtained from 20 companies as mutual fund owners officially registered with the Financial Services Authority (OJK) throughout 2019–2022. By operating Moderated Regression Analysis (MRA) into SmartPLS 4, there are interactions between prices and exchange rates, prices and interest rates, and prices and gold prices. As with the relationship between the age of ETF mutual funds traded on the Indonesian Stock Exchange (IDX) and the gold price, these two variables have a strong and positive correlation. This implies that relatively small changes in gold prices over the monitoring period may impact the fund age ETF. This positive association shows that an ETF investment can have its life extended by a relatively small increase in gold prices. This research indicates a strong causality, which improves the ETF’s performance on the IDX as fund age rises. Furthermore, the second model examines how fund age, gold, and coal have a direct impact on ETF mutual fund performance. It also looks closely at how indirectly coal, gold, and fund age affect ETF performance. The age of the fund, gold, coal, and exchange rates affect the performance of ETFs. While the effect is not statistically significant, interest rates, gold, coal, and fund age have a beneficial impact on ETF performance. Implications for policy makers to monitor and re-evaluate commodity price fluctuations using mining production regulation scenarios that are balanced with quality. Weaknesses of the current study such as the observation period need to be taken into consideration in future research.

Financial risk management in agriculture: mitigation strategies and protection against economic variables

This work explores essential strategies for managing financial and operational risks in the agricultural sector, a crucial pillar of the global economy, but one that is exposed to a wide range of financial risks. These risks include fluctuations in commodity prices, access to credit, operational risks, climate change, exchange rate variations, and government policies. To ensure the sustainability and profitability of agricultural operations, it is imperative that producers adopt effective financial risk management strategies. This article addresses the main mitigation and protection strategies against economic variables in the context of agriculture. The methodology of this study is based on a systematic literature review, focused on identifying, analyzing, and synthesizing financial risk management strategies in agriculture. The review covers the analysis of advanced precision technologies, which optimize agricultural production and reduce waste, as well as sustainable agricultural practices, adequate insurance to mitigate the impacts of climate risks, and commodity hedging. Strategies for diversifying crops and agricultural activities to distribute risk and improve financial resilience are also discussed. In conclusion, effective financial risk management in agriculture requires a multifaceted approach that integrates mitigation strategies for various types of risks. The adoption of advanced technologies, sustainable agricultural practices, adequate insurance, and a thorough understanding of market and policy dynamics are fundamental to strengthening resilience and ensuring the sustainability of the agricultural sector against adverse economic variables.

Evaluasi Performa Keuangan PT Tunas Baru Lampung Tbk Menggunakan Rasio Keuangan

PT Tunas Baru Lampung Tbk is a leading agribusiness company in Indonesia that focuses on producing and distributing palm oil. Analysis of financial statements is important for evaluating a company's financial performance and position in the context of external challenges and opportunities, such as the COVID-19 pandemic and commodity price fluctuations. The financial ratio analysis method evaluates a company's profitability, liquidity, solvency, activity, development, and productivity. This research adopts a quantitative descriptive approach by utilizing financial report data from PT Tunas Baru Lampung Tbk for 2020-2022. Financial ratio analysis shows improvements in several aspects of the company's financial performance despite facing certain fluctuations. PT Tunas Baru Lampung Tbk maintained relatively good financial health amidst external challenges, with efforts to increase operational efficiency and support long-term growth.

Cross-commodity market integration and price transmission in Thailand’s livestock sector

The ability to substitute goods and services is crucial for maintaining market stability during price fluctuations, particularly in the livestock market, where products are interchangeable. This study aimed to analyse market integration and asymmetric price transmission concerning livestock commodity prices in Thailand. Specifically, it focused on beef cattle, swine, broiler chicken, and chicken egg prices, using time-series data from January 2011 to December 2022. The analysis employed unit root tests to check if the time series data were stationary, Granger causality tests to determine the direction of relationships among livestock prices and an asymmetric price transmission model to examine short-term asymmetry and adjustment in cross-commodity prices. The findings indicate three directions of price integration in Thailand’s livestock market: from broiler chicken price to chicken egg price, from swine price to chicken egg price, and from swine price to broiler chicken price. The results suggest that price transmission in Thailand is symmetrical, demonstrating an efficient interdependent relationship. Thus, the findings indicate that chicken eggs are a substitute for broiler chickens and swine when prices fluctuate, while broiler chickens are a substitute for swine. The results reveal that chicken eggs can replace swine consumption more effectively than broiler chickens within Thailand. This study highlights that chicken eggs are the most effective substitute during livestock price fluctuations in Thailand, with broiler chickens being the second most effective. Consequently, stakeholders in the livestock supply chain, such as policymakers, entrepreneurs, and farmers, should understand the integration of different commodities and price transmission in Thailand’s livestock market. To guarantee market stability, stakeholders should manage the demand and supply of livestock commodities and acquire chicken eggs and broiler chickens during significant fluctuations in domestic livestock commodity prices

Determinants of fiscal rules policy credibility in West African Economic and Monetary Union countries

AbstractMore than a quarter century after implementing fiscal rules, and despite extensions of the convergence phase, West African Economic and Monetary Union (WAEMU) countries are still unable to comply with the fiscal rules established. In addition, these countries are facing multiple shocks, exerting pressure on public finances. Based on this context, this paper empirically investigates the drivers of fiscal rules policy credibility of seven WAEMU countries over the period 1994–2019. Using two measures of fiscal rules policy credibility and pooled mean group (PMG) econometric estimator of dynamic panel, we find that internal and external macroeconomic variables are the main determinants of fiscal rules policy credibility in WAEMU countries in the long run. The institutional and political variables have mitigated effects. Specifically, we find that debt accumulation, economic activity fluctuation (gross domestic product), fiscal space reduction, and international commodity price fluctuation harm fiscal rules policy credibility, meaning that these variables deviate the fiscal policy from its target value. Our results suggest that WAEMU governments should pay attention to global shocks to reduce their macroeconomic vulnerabilities and better manage their economic resilience. In addition, they should better manage debt by allocating it to productive sectors, or improve the quality of institutions by establishing a genuine democracy that improves decision‐making and reduces deviant behaviour.

Analisis Faktor-Faktor Yang Mempengaruhi Tingkat Pengangguran Dan Inflasi di Kabupaten Gorontalo

Unemployment and inflation are two main issues that affect economic and social stability in Gorontalo Regency. This study aims to analyze the factors that influence unemployment and inflation rates in the region. Qualitative research methods were used by conducting in-depth interviews with various stakeholders, including workers, entrepreneurs and district governments. The results of the analysis show that factors such as lack of workforce skills, lack of available jobs, rising production costs, and fluctuations in commodity prices contribute to high levels of unemployment and inflation. Evaluation of the limitations of previous studies reveals that the lack of in-depth analysis of the factors underlying these two issues is one of the main weaknesses. Based on the research results, it is recommended that local governments adopt a holistic and integrated approach in overcoming these two problems, by strengthening cross-sector collaboration and implementing effective policies in controlling inflation and increasing employment opportunities. Further research needs to be conducted to evaluate the impact of implementing the proposed policies over a longer period.

Near-term forward rate spread and commodity index relationship with real economic activity in Brazil

This study investigates the relationship between Brazilian economic cycles and two key indicators: the international S&P GSCI commodity index and the near-term forward spread derived from the Brazilian interest rate term structure. We find that the forward spread serves as a robust leading indicator of economic downturns in Brazil, offering recession forecasts up to four quarters in advance. This underscores a link between yield curve steepness and recession likelihood in Brazil. However, we uncover distinct cyclical behaviors in Brazil's term structure that diverge from patterns in the United States. Furthermore, our research reveals the significant influence of commodity price fluctuations on Brazil's economic performance, underscoring a strong correlation between commodity markets and economic outcomes. Examining term structure and commodity prices together provides novel insights into monitoring emerging market cycles. These indicators can assist policymakers and improve early warning systems, especially in developing economies like Brazil.

Navigating the green transition: the influence of energy volatility on green and sustainable ETFs

ABSTRACT This study explores the interaction between extreme energy commodity price fluctuations and green and sustainable Exchange Traded Funds (ETFs) returns. Empirical findings indicate that the re- turns of green ETFs exhibit variation in the sign and magnitude of their response to different energy commodities. Specifically, we observe significant influences from crude oil and natural gas price movements, whereas carbon emissions products show no evidence of a substantial interaction.

The Rise of the Multipolar World Order: Opportunities and Challenges for Africa.

Purpose: The aim of this article was to investigate the rise of the multipolar world order and focus on opportunities and challenges for Africa. The 21st century is witnessing a fundamental shift in global power dynamics, moving away from the unipolar dominance of the United States towards a multipolar world characterized by multiple centers of economic, political, and military influence. In this evolving landscape, Africa, long relegated to the margins of global affairs, stands poised to play a pivotal role. With its burgeoning population, abundant resources, and increasing economic clout, the continent stands at a crossroads – a potential powerhouse with the agency to shape its own destiny and influence the trajectory of the international system. In this paper focus on some theories such as Realism, Liberalism and Constructivism and Rational Choice theory.
 Methodology: This study used a qualitative descriptive design to obtain a straight description of the phenomena, explain deeply the issues, and provide an accurate analysis for the study and target of the article was Africa.
 Findings: The result of the study was positive and it needs to demonstrate that and maintain Africa cooperation and capital building.
 Unique contribution to theory, policy and practice: Diversification move beyond resource extraction invest in value-added industries, agriculture, and tourism to build resilient economies less vulnerable to commodity price fluctuations. Regional Integration, deepen continental free trade agreements, infrastructure development, and joint investments to create a strong African market and attract foreign investment. Technological Leap, embrace technological advancements like digitalization and renewable energy to leapfrog development stages and gain competitive advantages.

Commodity price volatility and the psychological well‐being of farmers

AbstractWe examine the effects of income uncertainty on mental health in Vietnam. We assess this issue using volatility in the price of coffee, a key export commodity, that exposes small coffee farmers to income uncertainty. Using household panel data collected over 2016–2020, we find an increase in volatility of the international coffee price to be positively associated with psychological distress among coffee farmers. The magnitude is greater for men, and the findings are robust to several checks. These results are further substantiated by corresponding estimates for related health measures and self‐reported happiness. Channels include an increase in mental stress due to pessimistic expectations of future economic well‐being, increased cognitive load and alcohol consumption, and reduced social capital. The results highlight the psychological toll of living with income uncertainty and provide support for the provision of social safety nets that protect farmers from frequent commodity price fluctuations.

Understanding the role of China's factors in international commodity price fluctuations: A perspective of monetary-fiscal policy interaction

This paper examines the role of China's factors in international commodity price fluctuations from a perspective of monetary-fiscal policy interaction. We employ a nonlinear Interacted-VAR model to investigate whether the impact of China's monetary policy shocks on international commodity prices is conditional on its fiscal policy stances. Using several measures of China's fiscal policy stance, we estimate their interaction with monetary policy identified through Interacted-VAR analysis. We find that the response of international commodity prices to China's monetary policy is much stronger and more persistent in the presence of its active fiscal policy stance. The empirical findings are very consistent when using several alternative model specifications. Moreover, our analysis suggests that failing to take into account the interaction of monetary-fiscal policies in the model might lead to incorrectly assessing the impact of monetary policy on commodity price fluctuations. In addition, our results reveal the substantial heterogeneity in the impact of China's factors on commodity prices across sectors. These empirical findings offer insights into the interaction of monetary-fiscal policies, as well as the role of China's factors in the international commodity markets.

Exogenous oil supply shocks and global agricultural commodity prices: The role of biofuels

Using quarterly data ranging from 1986Q1 to 2019Q4, this paper identifies an oil supply shock that is exogenous to global real economic activity in the impact quarter based on the proxy structural vector autoregressions (SVAR). Then, the impact of this shock on global agricultural commodity prices is examined, with a particular focus on the role of biofuels in distributing the impact of this shock on global food commodity prices. We find that unfavorable exogenous oil supply shocks have a significant positive effect on global agricultural commodity prices. Moreover, the significant positive effect of the unfavorable exogenous oil supply shock on global agricultural commodity prices is primarily attributable to the impact of the shock on the prices of oils, meals and grains, which are all key biofuel feedstocks. We find evidence that unfavorable exogenous oil supply shocks affect global food commodity prices partly through the biofuel production channel. Finally, we uncover that exogenous oil supply shocks have played an important role in historical food commodity price movements, especially since the early 2000s. These findings are very useful for policymakers in understanding the relationship between oil supply shocks and global agricultural commodity price fluctuations.

Determinants that attract and discourage foreign direct investment in GCC countries: Do macroeconomic and environmental factors matter?

In general, foreign direct investments (FDIs) play a crucial role in driving a country's economic development, promoting diversification, and enhancing competitiveness. The Gulf Cooperation Council (GCC) countries, which heavily rely on the oil and gas sectors, are particularly vulnerable to fluctuations in commodity prices. However, these countries have recognized the imperative of economic diversification and have increasingly turned to inward FDIs to achieve it. By attracting capital, advanced technology, and expertise from foreign investors, FDIs enable the GCC countries to expand their economic base beyond the oil and gas sectors. This diversification not only creates employment opportunities but also fosters resilient economic growth, ultimately leading to an improvement in the living standards of the local population. This study investigates the macroeconomic and environmental factors that potentially attract foreign direct investment (FDI) inflows into the Gulf Cooperation Council (GCC) countries in the long run. Additionally, the study explores the causal relationship between these factors and FDI inflows. The panel autoregressive distributed lag (ARDL) approach to co-integration is the primary analytical technique used, utilizing long time-series data from six GCC countries, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) during the period 1990-2019. The empirical results indicate that, in the long run, almost all independent variables significantly influence FDI in GCC countries. Variables such as GDP growth (GDPG), inflation (INFL), carbon dioxide emissions (CO2), and urbanization (URB) are found to be highly significant (p≤0.01) in their impact on FDI. Moreover, unemployment (UNEMP) also positively and significantly influences FDI in these countries in the long run. Based on the key findings, strategies aimed at reducing persistently high unemployment rates, maintaining population growth, viewing FDI as a driver for GDP growth, and continuing with infrastructure development and urbanization are expected to attract more FDI inflows into GCC countries in the long run. Additionally, fostering both long-term economic incentives and creating a conducive business infrastructure for investors are vital for attracting inward FDI into any nation, including those in the GCC. This research would benefit various stakeholders, including governments, local businesses, investors, academia, and the local society, by providing valuable knowledge and informing decision-making processes related to economic development, diversification, and investment promotion.

Commodity prices and domestic credit in Central and Eastern Europe: Are there asymmetric effects?

Fluctuations in commodity prices can have an impact on a firm’s costs and revenues, national income, or a country’s creditworthiness, leading to increased borrowing and levels of domestic credit. These effects need not be symmetric; it is possible that losses due to a commodity price decrease might be worse than the gains that result from an equivalent price increase. In addition, these dynamics might differ between frequently studied commodity exporters and energy importers such as those in Central and Eastern Europe. Here, an index of commodity prices and their volatility are included in a time-series model alongside the traditional macroeconomic determinants for 11 of these EU members. Forecast Error Variance Decompositions reveal that shocks to commodity prices spill over most strongly to inflation in Latvia and credit growth in Poland and Slovakia—the two countries that have seen continuous increases in credit. Cointegration analysis shows that while GDP growth and inflation drive credit levels in many cases, commodity price increases lead to increased credit shares in the Czech Republic, Latvia and Lithuania. A nonlinear model finds that commodity price increases also increase credit in Romania, while decreases lead to increased credit shares in Hungary. Commodity price volatility leads to credit increases in Latvia and Lithuania, confirming that these two Baltic countries are most affected by macroeconomic shocks.