We discuss the impacts of future energy prices and biofuel production levels on agricultural market prices,
production, and trade, and present the results of a partial equilibrium model of international agricultural trade with
interconnected markets. The results of the model suggest that the long-term trend of declining real agricultural
commodity prices has been reversed. A key result in this regard is that the price of energy has become a major driving
force of agricultural world market prices. For instance, until 2016/18 the price of wheat is expected to increase by about
16 percent, 35 percent, and 91 percent based on oil prices of US$45, US$70 and US$102 per barrel, respectively. The
2016/18 baseline projection shows an increase in total world production from 10 percent for wheat to 30 percent for
oilseeds. Variations in energy cost have the biggest impact on sugar production in the European Union, corn production
in North America, other grains production in Brazil and Australia, sugar production in China, and corn production in the
Commonwealth of Independent States (CIS). Increased bioenergy demand has the biggest impact on corn production,
followed by sugar and oilseeds production. The impacts and importance of energy prices and biofuel production for
agricultural trade varies between commodities and regions. Future long-term biofuel scenarios could change
considerably, depending on technology and bioenergy production pathways.