CULTIVAR 1 - Volatilidade dos Mercados Agrícolas

23 In search for the causes of these developments, alternative explanatory approaches have been proposed. Initially, most of these approaches were uni-dimensional in nature. Most pro- minent among those, especially at the early stages of the debate, was to assign the cause of the explosion in agricultural prices to the combined effect of limited land availability and declines in yield growth, strong global population and income growth, especially from China and India, and the continuous increase in non-food uses of agricultural commodities. Suchmacro-economic fac- tors could impact the level of prices, but their link to high price volatility of recent times is less evident. This period is also one characterised by low interest rates, with the direct impact of ma- cro developments coming through other variables such as differences in the GDP growth rate or exchange rates. The impressive increase of ChineseGDP, both when compared to theGDP of major developed countries or growth in the other BRIC countries, added to the rising demand of commodities, es- pecially metals andminerals, while the depreciation of theUS dollar played its role in the increase of commodity prices as these are mainly expressed in US dollars.Yet it gradually became evident that the undeniable increase in global food demand was not necessarily changing faster than pre- viously thought; it was supply that was slowing down more. It is lags in the supply response that seem to generate most of the concerns related to the ca- pacity of agricultural production tomeet population and income growth with little additional land available to come into production, at least in the medium term, and led to calls for much stronger emphasis on research, innovation and knowledge transfer is pertinent in meeting the “demand to produce more with less”.Weather volatility and the increasing influence of climate change also added a new dimension in the concerns expressed, especially those linked to future expectations, and also played a major role in exacerbating the impact of weather on price developments. At times explosive, the global increase in price levels brought another source of possible ex- planation, linking the discussion to a “super-cycle” in commodities. The impact from “financiali- sation”, that is from the transformation of commodities into asset values, focused the discussion on market failures, real or perceived, which were exacerbated by the result of the financial cri- sis. The “financialisation” of commodities drove a significant amount of commodity assets under management into agricultural markets, thus increasing the money which was “external” to the fundamentals of agricultural markets. The extent to which this development affected price mo- vements still remains a hotly debated issue, but the facts remain clear. The money that moved into agricultural market seems to have stabilized in recent years, while speculative positions are clearly on the decline. As a counter argument to the attribution of price volatility to financial markets, another ap- proach, forgotten for some time due to market developments in the late 1990s, came back with vengeance. Changes in stocks should explain what was happening in prices, not as a result of market failure but as a sign of markets playing their role, especially since the decline in stocks in some commodities was pretty significant. In two commodities that dominated the food security debate, wheat and maize, it is clear that this inverse relationship played a role in the recent in- crease in agricultural prices. When expressed in real terms, the response of prices to stock levels differs between wheat and maize after 2005, with maize prices seemingly more sensitive to stock changes than those of wheat.