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Abstract
Higher weather volatility may be reflected in higher incidences of weather shocks.
Weather shocks could potentially affect the supply of agricultural commodities and their
prices. In this study, the effects of weather shocks on agricultural commodity prices in
Central Asia are investigated at the provincial scale using monthly data for the period of
2000-2010. The study uses an estimation method, where the idiosyncratic components of
the variables are analyzed using Feasible Generalized Least Squares (FGLS) panel
regression in the presence of cross-sectional dependence and serial autocorrelation. The
analysis indicates that weather volatility and, especially, the fluctuations in the
availability of irrigation water have statistically significant effects on wheat prices in
Central Asia. Weather shocks, involving lower than usual temperatures and precipitation
amounts, could create favorable conditions for higher wheat prices in the region.