The impact of fluctuations in crop volume on prices in the Russian grain market
Abstract. The aim of the work was to study the relationship between the dynamics of domestic prices in the markets of individual types of grain products and fluctuations in gross harvests for the corresponding grain crops under conditions of varying degrees of integration into the world market for the corresponding type of product. Based on the theoretical analysis, an assumption was made that domestic prices in Russia depend on fluctuations in the volumes of gross harvests for grain crops used for domestic consumption in the country, as well as for grain products that have a significant share of deliveries to the world market. Another assumption was that domestic prices for grain crops do not react noticeably to changes in the volumes of gross harvests for types of grain products that have an insignificant share in deliveries to the world market. Conducting a regression analysis made it possible to confirm the hypotheses of the study. Average annual prices for wheat, rye and oats turned out to be dependent on fluctuations in the amount of gross harvests, and there was no such dependence with respect to prices for barley and corn. At the same time, Russia has a large share in the world`s wheat supplies, consumes rye and oats exclusively domestically, and has an insignificant share in the world market for barley and corn. The predominant contribution to the instability of harvest volumes and, as a result, the change in domestic prices was made by the dynamics of the yield of individual types of grain crops. The results of the study can be used to develop instruments for state regulation of the market for individual types of grain products, in particular, to reduce price volatility in these markets.
Keywords: grain market, price, gross harvest, yield, world market, export.
Highlights:
- the amount of gross harvest is an important price-forming factor for those types of grain for which the country occupies a leading position on the world market, as well as for crops intended for consumption on the domestic market;
- fluctuations in the volume of gross harvest do not have a significant impact on the formation of prices for types of grain in the world export of which the country does not play a key role;
- the elasticity of average annual prices for wheat, rye and oats in relation to the amount of gross harvest in the previous calendar year amounted to from -0.42 to -0.35, domestic prices for barley and corn were insensitive to the dynamics of the volume of gross harvest;
- fluctuations in the yield of the main crops made a decisive contribution to the dynamics of gross harvest and, as a result, to the change in prices on the Russian grain market.
Alexey I. Boldiasov, Oksana S. Karashchuk - Plekhanov Russian University of Economics, Moscow, Russia