Stocks-to-use ratios and prices as indicators of vulnerability to spikes in global cereal markets
This article is a revised and abbreviated version of the study “Stocks-To-Use Ratios as Indicators of Vulnerability to Spikes in Global Cereal Markets”, funded by the AMIS Global Food Market Information Group of the G-20 and presented at the 2nd Session of the Group at the United Nations Food and Agriculture Organization, Rome, Italy, October 3, 2012. We acknowledge the important technical advice of Juan Bobenrieth and the excellent research assistance of Ernesto Guerra Vallejos and Yang Xie.
Eugenio Bobenrieth is professor at Departamento de Economía Agraria and Instituto de Economía, Pontificia Universidad Católica de Chile, and research fellow at Finance UC. Brian Wright is professor and chair, and Di Zeng is a postdoctoral researcher, at Department of Agricultural and Resource Economics, University of California, Berkeley. Work on this article was supported by the Energy Biosciences Institute, and by CONICYT/Fondo Nacional de Desarrollo Científico y Tecnológico (FONDECYT) Projects 1130257 and 1090017. Eugenio Bobenrieth acknowledges partial financial support from Grupo Security through Finance UC, and from Project NS 100046 of the Iniciativa Científica Milenio of the Ministerio de Economía, Fomento y Turismo, Chile.
We identify critical stocks-to-use ratios (SURs) for major grains and for an index of total calories from these grains. The latter appears to be a promising indicator of vulnerability to large price spikes when the current price shows no cause for concern. More generally, our results suggest that stocks data, though no doubt unreliable, can be valuable complements to price data as indicators of vulnerability to shortages and price spikes.