The Ethanol Papers - Paperturn manuscript - Flipbook - Page 612
just so they could take all the corn-on-the-cobs out of the mouths of starving
people. Here’s some excerpts from the report:
PLACING THE 2006/08 COMMODITY PRICE BOOM INTO PERSPECTIVE
John Baffes - THE WORLD BANK
Tassos Haniotis - EUROPEAN COMISSION
“The 200608 commodity boom was one of the longest and broadest of
the post WWII period. The boom - and especially the 2008 rally, when
crude oil prices peaked at US$ 133/barrel (up 94 percent from a year
earlier) and rice prices doubled within just five months - has renewed interest in the long-term behavior and determinants of commodity prices,
and raised questions about whether commodity prices have reversed the
downward course that most of them followed during most of the past century. It has also produced numerous calls for coordinated policy actions
at the national and international level to address food availability and food
security concerns.”
“The increasing interaction between the price movements of energy and
nonenergy commodities during the boom focused attention on the impact
of growing demand for biofuels, including for maize - based ethanol
(mainly in the US) and oilseed - based biodiesel production (mainly in
Europe). During the boom, maize and crude oil prices moved in tandem,
pointing to an emerging new and fixed relationship between them. Obviously, maize and its use for ethanol moved into the picture as significant
factors affecting price developments. But how much impact was there,
and was there a similar one in oilseeds, resulting from their use for biodiesel?”
“Concluding Remarks - Numerous factors have contributed to the recent
commodity boom, and have been analyzed extensively in the literature.
Yet their relative weight continues to be an area of contention. In this paper we examined three key factors whose role has been somewhat controversial: speculation, the growth of demand for food commodities by
emerging economies and the role of biofuels. We conjecture that index
fund activity (one type of “speculative” activity among the many that the
literature refers to) played a key role during the 2008 price spike. Biofuels
played some role too, but much less than initially thought.”
