Type of Culminating Activity

Graduate Student Project

Graduation Date

7-2017

Degree Title

Interdisciplinary Master of Arts

Major Advisor

Nicole Molumby

Abstract

Markets with petroleum products as primary inputs face unique price pressures. I provide a thorough analysis of U.S. wheat prices to investigate connections between international petroleum markets and commodity prices in the US. This research is critical for farmers, policymakers, and scholars interested in the relationship between crude oil inputs and commodity outputs. The research thus offers novel information for a large proportion of US territory under agricultural cultivation. Moreover, this research has implications for agricultural production and policy formulation around the world. The results of the investigation demonstrate support for high short-term volatility in wheat prices based on oil price shifts, but much less long run volatility than is commonly assumed in scholarship and practice. The price of diesel presents a continuous, co-integrated, and causal price pressure on the price of US wheat. However, the First Contract Purchase Price (FPP), and the refinery crude oil import acquisition cost do not have statistically significant relationships with the price of diesel, and therefore do not have a price pressure impact on the price of US wheat in the markets. Pragmatically, the crude oil streams being used to meet regional diesel demand will have an influence. This suggests that the price pressures affecting price levels are different from the pragmatic impacts of crude oil costs at the pump.

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