TY - JOUR
T1 - Russia’s invasion of Ukraine increased the synchronisation of global commodity prices
AU - Ihle, Rico
AU - Bar-Nahum, Ziv
AU - Nivievskyi, Oleg
AU - Rubin, Ofir D.
N1 - Publisher Copyright:
© 2022 The Authors. The Australian Journal of Agricultural and Resource Economics published by John Wiley & Sons Australia, Ltd on behalf of Australasian Agricultural and Resource Economics Society Inc.
PY - 2022/10/1
Y1 - 2022/10/1
N2 - The Russian Federation’s efforts to expand its regional political influence culminated in launching a full-scale war of aggression on Ukraine on 24 February 2022. As both countries are large exporters of commodities crucial for global food and energy security, the resulting abrupt supply chains disruptions created substantial uncertainty in commodity markets worldwide. This study quantifies to what extent this major shock induced global commodity prices to move more synchronously by gauging their time-varying comovement. Using the concordance index, it analyses the development of 15 key global commodity price indices from January 2010 to July 2022. We find that the supply chains disruptions increased synchronisation of grain, energy and fertiliser prices at the global level in direction and magnitude. Moreover, they resulted in contagion across numerous food and non-food markets, creating a global covariate shock to food and energy security. Notably, the increased synchronisation at broad scale restricts the ability of consumers to mitigate the adverse effects of food and energy price inflation by resorting to inexpensive alternatives. Hence, policymakers must improve the resilience of global food supply chains sustainably such that adverse effects of attaining the Sustainable Development Goals in crises can be minimised.
AB - The Russian Federation’s efforts to expand its regional political influence culminated in launching a full-scale war of aggression on Ukraine on 24 February 2022. As both countries are large exporters of commodities crucial for global food and energy security, the resulting abrupt supply chains disruptions created substantial uncertainty in commodity markets worldwide. This study quantifies to what extent this major shock induced global commodity prices to move more synchronously by gauging their time-varying comovement. Using the concordance index, it analyses the development of 15 key global commodity price indices from January 2010 to July 2022. We find that the supply chains disruptions increased synchronisation of grain, energy and fertiliser prices at the global level in direction and magnitude. Moreover, they resulted in contagion across numerous food and non-food markets, creating a global covariate shock to food and energy security. Notably, the increased synchronisation at broad scale restricts the ability of consumers to mitigate the adverse effects of food and energy price inflation by resorting to inexpensive alternatives. Hence, policymakers must improve the resilience of global food supply chains sustainably such that adverse effects of attaining the Sustainable Development Goals in crises can be minimised.
KW - commodity price indices
KW - covariate market shock
KW - food market vulnerability
KW - food system resilience
KW - price comovement
KW - supply chain disruption
KW - war
UR - http://www.scopus.com/inward/record.url?scp=85141379669&partnerID=8YFLogxK
U2 - 10.1111/1467-8489.12496
DO - 10.1111/1467-8489.12496
M3 - Article
AN - SCOPUS:85141379669
SN - 1364-985X
VL - 66
SP - 775
EP - 796
JO - Australian Journal of Agricultural and Resource Economics
JF - Australian Journal of Agricultural and Resource Economics
IS - 4
ER -