Study of statistical characteristics and investigation of possible cross-correlation between agricultural product prices and precipitation

It is known that agricultural systems depend on hydro-meteorological factors. In fact, during the past years, it is observed an increase in prices and in the volatility of prices of agricultural commodities. The 'food crisis' poses serious risks and even questions the survival of certain social groups in the modern world. To evaluate the effects of extreme events of precipitation on commodities’ prices, the statistical characteristics of monthly prices received by farmers and futures of corn and soy products in USA, for the period 1960-2012 and monthly time series of precipitation from 200 stations in their respective areas of production and for the period from 1897 to 2012, are analyzed. In addition, two indices of short-term drought are calculated for the production areas of both products and the key producers States. The first one is the hydrologic Moisture anomaly Index (Palmer Z), which shows the relative deviation of the weather patterns of a given month in a given area from the average moisture status of that given month. The second one is the statistical Standardized Precipitation Index (SPI, one, two and three months), which is based on the probability. Then, the relationship between price and monthly changes in the price of the products with the corresponding precipitation and the corresponding values of the drought indices, on a monthly basis, in the production zones and in the producer States, is investigated. The analysis indicates that the largest price increases have incurred simultaneously with drought events during the growth period of the crops, the month July.