RMIT International University Vietnam

Assignment Cover Page

Subject Code: ECON1193B

Subject Name: Business Statistics 1

Location & Campus (SGS or HN) where you RMIT HANOI
study:
Title of Assignment: Assignment 1 - Case Study analysis

Student name: Nguyen The Nam An

Student Number: s3926614
Teachers Name: Nguyen Truong Giang
Assignment due date: 21st March 2022
Date of Submission: 21st March 2022
Number of pages including this one: 13
Word Count: 1535

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Table of Contents
I. Introduction............................................................................................................................................3
II. Price changes analysis of Robusta Coffee Beans and Oats................................................................4
1. Line graph of price changes.............................................................................................................4
2. Measure of Central Tendency..........................................................................................................6
3. Measures of Variation......................................................................................................................7
4. Histograms.......................................................................................................................................8
5. Box-and-whisker plots.....................................................................................................................9
III. Conclusion.........................................................................................................................................10
IV. Factors that affect the price growth.................................................................................................11
1. Supply and demand........................................................................................................................11
2. Currency change............................................................................................................................11
3. Supply chain and transportation.....................................................................................................11
V. Trends of the U.S.’ annual inflation rate...........................................................................................12
VI. References..........................................................................................................................................13

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I. Introduction
A commodities market is a place where you may purchase, sell, and trade raw materials, which
are often divided into two major categories: hard commodities and soft commodities. Hard commodities
are mined or extracted natural resources, such as gold, rubber, and oil, while soft commodities are
agricultural goods or animals, such as maize, wheat, coffee, sugar, soybeans, and pork. (Hayes 2021)
Commodities are distinguished by the fact that they are required by contemporary society and that their
prices vary substantially. Commodity markets helps maintain price stability by enabling suppliers to lock
in the price of their commodity before delivering it to the customer, which likewise sets the future price
for consumers.
Many studies have been conducted in the recent decades to examine the link between different
commodities as a result of the financialization of commodities (Zaremba et al. 2020). Oil and agricultural
commodities are essential components of commodity markets, therefore understanding their fundamental
dynamics is critical (Umar et al. 2021). Over the past two decades, there has been a significant input of
money into commodity markets, resulting in the commodity financialization phenomenon, which has
been a key impetus for new studies of commodity market pricing, since financialization may have an
influence on commodity prices (Ding et al. 2021).
In this case study, regarding the agriculture commodity market, the majority of agriculture
commodities and food commerce is made up of trading in processed food items (Figure 1). Between 1995
and 2000, the percentage of food in overall agri-food exports remained steady, eventually increasing from
roughly 70% in 2000 to 76% in 2018. (Figure 1). Agricultural commodity exports increased at an annual
rate of 1.9 percent. Throughout the period 1995–2018, high-income nations had more agri-food imports
than exports, while upper and lower middle-income countries were net exporters (FAO 2020).
This case study will have an analysis and discussion on the change in prices of Robusta Coffee
Beans and Oats from 1994 to 2020.

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 Figure 1: The State of Agricultural Commodity Markets 2020 by FAO, 2020, graphs.

II. Price changes analysis of Robusta Coffee Beans and Oats

1. Line graph of price changes

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 Commoditi es Price Changes (Annual Change Over
Previous Year) From 1994 to 2020 (Unit: %)
140.00

120.00

100.00

80.00

60.00

40.00

20.00

0.00
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
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14
15
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20
-20.00
19
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20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
-40.00

-60.00

Robusta Coffee Beans Oats

The graph clearly illustrates a fluctuation trend from both commodities. The price of Robusta Coffee
Beans starts off with a dramatic fall at the beginning, meanwhile the price of Oats seems to grow
marginally. Both commodities dip in the year of 2003-2004, then in 2009 due to the financial crisis. To
summarize, throughout the period of 1994-2020, the Robusta Coffee Beans’ price decrease significantly
from a peak of 123.96% in 1994 to a negative growth in 2020, when the Oats’ price has marginally
increased from -10.79% in 1994 to 3.48% in 2020.

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 2. Measure of Central Tendency
The "best" measure should be representative of a "typical" score in this data set.
Regarding the Robusta Coffee Beans, the price change in 1994 is an outlier since the number
(123.96%) is much larger than the rest in the period. Because there is a high outlier, the median is the best
measure to describe the data set. The mean of 5.31% is much higher than over a half of the data, so it
doesn't represent the Central Tendency very well. Therefore, the best measure for Robusta Coffee Beans
is the median of 0.05.
In the case of Oats, since there are no prominent outliers and the mean is larger than half of the data
points, choosing mean as the central tendency should be more suitable than median.
As we can observe from the measures of central tendency of price changes in the two commodities,
on average, the prices of both have grown positively throughout the period. Specifically, the price of Oats
increases much more with an average number of 5.20%, while the Robusta Coffee Beans only grow
0.05%.

Mean Median Mode

Robusta Coffee Beans 5.31 0.05 #N/A
Oats 5.20 3.48 #N/A

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 Interquartile Standard Coefficient of
Range Variance
Range deviation Variation (%)

Robusta Coffee Beans 161.64 26.673 1021.488 31.961 602.324

Oats 74.98 36.873 480.709 21.925 422.003
3. Measures of Variation

Variance is computed using square units, hence it would not be utilized for measures of variation. The
most widely used metric is standard deviation, although it is vulnerable to outliers and so inappropriate
for this circumstance. Similarly, range and coefficient of variation are vulnerable to outliers and would
not be applied. As a result, interquartile range (IQR), a resistant summary measure, will be the most
appropriate measure of variation in this case.

Based on the table above, the IQR of Oats (36.873%) is greater than Robusta Coffee Beans
(26.873%). This means the middle 50% values of price changes of Oats from 1994 to 2020 are
more spread out and thus have greater variability than Robusta Coffee Beans.

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 4. Histograms

Robusta Coffee Beans

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9
8
7
6
Frequency

5
4
3
2
1
0
<-20 [-20, 0] [0, 20] [20, 40] [40, 60] [60, 80] [80, 100] >100
Bin

Frequency

Oats
12

10

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Frequency

0
<-20 [-20, 0] [0, 20] [20, 40] [40, 60] [60, 80] [80, 100] >100
Bin

Frequency

According to the histograms, the price changes in Robusta Coffee Beans have the highest frequency
in the -20-0% range, meanwhile price changes in Oats mostly occur in the range of 20-40%. The value of
both histograms is asymmetrically distributed, and the shape of Robusta Coffee Beans is left-skewed.
Besides, the histograms also presented that the Oats have more positive growth and less negative growth
than the Robusta Coffee Beans

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 5. Box-and-whisker plots

As observed, both Robusta Coffee Beans and Oats’s box-and-whisker plots are asymmetric, and
both are being left-skewed. Additionally, Oats dataset’s median and IQR are higher than that of Robusta
Coffee Beans. Last but not least, Robusta Coffee Beans has an outliner while Oats has none.

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III. Conclusion
The descriptive analysis of the 1994-2020 price changes of the two commodities has briefly
shows a fact that the growth in price of Oats is higher than Robusta Coffee Beans. At first, according to
line graph of prices change, even though there are wild fluctuations in both prices of the two
commodities, the performance of Oats should be considered better since the Robusta Coffee Beans
witnesses a dramatic fall at the beginning of the period and it has achieved a better price growth at the
end. Secondly, the box-and-whisker plots has shown that Oats’ median and IQR are greater than Robusta
Coffee Beans’, therefore the price changes are more variable. Finally, the histograms of the two
commodities have proved that the Oats’ frequencies of negative growth is smaller than those of Robusta
Coffee Beans and Oats prices has more years of positive growth in the period.

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IV. Factors that affect the price growth
1. Supply and demand
As the supply and demand for goods fluctuate, so will the price of the commodity. The underlying
concept is that as demand rises, so will commodity prices. Prices will also increase when the total supply
or inventory of a commodity falls. When confronted with diminishing demand and growing supply, the
price of a product will decline. The price of Coffee Beans is not an exception since coffee is one of the
most consumed beverages worldwide. Recently, the political pressure from Ukraine and Russia could
alter the demand of customers and their expenditure, leading to a change in coffee beans’ price.
In the case of Oats, since the beginning of COVID, the uprising demand of oat milk in North America and
abroad and the expanding volume of production are significantly increasing the demand for raw materials
of oats (Sjerven 2021). Therefore, its price could change relatively.

2. Currency change
Commodity prices, which are often calculated in US dollars, may increase and decrease in tandem
with the larger value of the USD. For instance, if the USD rises sharply against a basket of major
currencies, as indicated in commodities, the price of commodities such as crude oil, as well as other
Energy, Precious Metals, and Agricultural items, in this scenario both of the two mentioned
commoditites. Of course, markets do not always behave in such a consistent manner; yet such external
influences should be taken into account while trading.

3. Supply chain and transportation

The cost of transportation also plays a major part in the price fluctuation of commodities. As oats is
used for producing a large amount of oat milk recently, the cost of delivering raw materials could
possibly affect the original price of oats. This matter even influences coffee beans more, for example
Vietnam is in the top countries for growing and exporting Robusta coffee beans. If the overseas
transportation prices change or issues occur in the global supply chain, the price of these beans would be
heavily affected.

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V. Trends of the U.S.’ annual inflation rate
Inflation rate of the US
5.00

4.00
3.84
3.38 3.39
3.23 3.16
3.00 2.93
2.81 2.83 2.85
2.61 2.68
2.34 2.44
2.19 2.27
2.07 2.13
2.00
1.81
1.55 1.59 1.64 1.62
1.46
1.26 1.23
1.00

0.00 0.12
4 5 6 7 8 9 0 1 2 3 4 5
9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 -0.36 6 7 8 0 1 1 1 1 1 15 16 17 18 19 20
9 0 1 2 3 4
19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

-1.00

The Inflation rate of the US illustrated in the line graph above shares a several similar points with
the changes in prices of both Robusta Coffee Beans and Oats. Firstly, the inflation rate in the first years of
the 21st century, which is the same as the coffee beans. Next, the rate grows sharply in the next year and
fall dramatically in the following one, which also occurs with the Oats. All of the three rates decrease
significantly in the year of 2009 due to the financial crisis and then rise quickly in the next 2 years. To
summarize, there are some prominent points that all of the data follows and in general, the period of
1994-2020 sees wild fluctuations of not only the prices changes in commodities but also the inflation rate
of the US.

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VI. References
Ding, S, Cui, T, Zheng, D & Du, M 2021, 'The effects of commodity financialization on commodity
market volatility', Resources Policy, October, vol. 73, p. 102220, viewed 21 March 2022.
FAO 2020, The State of Agricultural Commodity Markets 2020, Food and Agriculture Organization of the
United Nations, FAO, <https://www.fao.org/documents/card/en/c/cb0665en>.
FAO 2020, The State of Agricultural Commodity Markets 2020, graphs, Food and Agriculture
Organization of the United Nations, viewed 21 March 2022,
<https://www.fao.org/documents/card/en/c/cb0665en>.
Hayes, A 2021, Commodity Market, Investopedia, viewed 21 March
2022, <https://www.investopedia.com/terms/c/commodity-market.asp>.
Sjerven, J, Higher oats prices may be key to steady and reliable supply, WORLD-GRAIN.com, viewed
21 March 2022, <https://www.world-grain.com/articles/15179-higher-oats-prices-may-be-key-to-steady-
and-reliable-supply>.
Umar, Z, Jareño, F & Escribano, A 2021, 'Agricultural commodity markets and oil prices: An analysis of
the dynamic return and volatility connectedness', Resources Policy, October, vol. 73, p. 102147, viewed
21 March 2022.
Zaremba, A, Umar, Z & Mikutowski, M 2021, 'Commodity financialisation and price co-movement:
Lessons from two centuries of evidence', Finance Research Letters, January, vol. 38, p. 101492, viewed
21 March 2022.

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