Correlation between oil prices and agricultural commodities: new perspectives

Abstract

The long run relationship between crude oil prices and agriculture commodities prices has been examined in the recent literature, which converges on the conclusion that the prices variations of these products are high and positively correlated. However, from July 2014 was observed significant drop in oil prices due to supply pressures, but that did not influence, as expected, the prices of agricultural commodities. Since then correlation between such series has changed, becoming less significant, or changing direction in some periods. This is an important issue in present times and the focus of the study, which aims to contribute to the understanding of the recent correlation between crude oil prices and agricultural commodities markets. In conclusion, this study considers that the income released by lower spending on oil reflected in increased demand for food in countries with large populations, supporting the prices of agricultural commodities and changing the correlation between this prices series. The question is, this scenario will be temporary, or new relationships between these markets will be formed.