The paper aims to analyse the relationship between energy prices (biodiesel, crude oil) and food commodities -vegetable oils used also as feedstock for biodiesel production. The econometric technique of price transmission, such as unit root test, cointegration test and vector error correction model, is applied to assess the interdependencies between energy prices and vegetable oil prices in Germany. Results suggest close price linkages between prices of vegetable oils and biodiesel and confirm that the vegetable oil prices drive the price dynamics of biodiesel. However, the simultaneous relationship is only revealed between biodiesel and soybean oil prices. The increase in crude oil prices is found to lead to an upward trend in the vegetable oils used for biodiesel production, thus influencing biodiesel prices as well.

Corn refers to the main feedstock for U.S. biofuels production and together with soybean oil, as typical biofuel food commodity that can be converted into biodiesel, accounts for over 90 percent of biofuels production in the United States. The paper focuses on the nexus of agri-food and energy markets in U.S. and investigates the interrelationships between the biofuel prices and prices of soybean oil, corn and wheat. Co-integration analysis and vector error correction model are carried out in order to investigate the relationship between the price series. The results show that biofuels and food price levels are co-integrated in the long run. These links show that food prices increment with a rise in biofuels prices. Additionally, not only food prices are determined by biofuels prices, but also vice versa.

The paper provides development status in the EU biofuel market by giving a comprehensive picture of production, consumption and production capacity of the first generation biofuels – biodiesel and bioethanol, while giving also insights into issues related to biofuel feedstocks such as crop production and harvested area. Development of crop production and harvested area for the crop products, used as a feedstock in the production of biofuels, have shown the changes in agriculture due to the growing trend of the biofuel sector. Additionally, the increasing production and consumption of biofuels may also affect the prices of agricultural commodities used as a feedstock for bioenergy production.

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