Quantile Dependence between Crude Oil and China’s Biofuel Feedstock Commodity Market

Round 1

Reviewer 1 Report

Major comments

1.         The paper needs to provide a more detailed explanation of why simply looking at the relationship between oil and feedstock returns can provide some insights into the effect of the oil market on feedstock. What I mean here is that since the production process of feedstock involves the use of crude oil, the paper needs to be aware that even if there is a connection between crude oil and feedstock this could be simply because crude oil is used as a source of production. Hence, more discussion needs to be done on why the current study can draw insights into the biofuel market.

2.         I think the paper should consider including some type of ethanol or biodiesel return to be included in the model since the effect of the crude oil market on the feedstock market is not direct but often caused via the biofuel market.

3.         Even if the paper use QQR, if the data are nonstationary the OLS estimation result is often biased and hence the study should consider using ARDL or VAR, VECM type of model. The quantile ARDL analysis can also estimate the results for the quantiles so the paper should be able to justify why the OLS was used instead of the ARDL.

4.         It is also unclear why the futures price was used instead of the spot price.

 

Minor comments

1.         Ln37, the term “food crap” is not a commonly used term. Do you mean by “food scrap” or “food crop”?

2.         Ln40-41, “directly or indirectly effects” should be “direct or indirect effects”

3.         Ln41, “by applying the feedback of biofuel” does not make sense. Please consider revising.

4.         Ln271, three biofuel feedstock. It is unclear why the paper ignored groundnut and rapeseed which are known to have large production levels within the feedstock in China. An explanation should be provided on why the paper only focused on the three products.

5.         Ln286, WTI crude oil. I feel the Arabian or Russian crude oil should be used instead of the WTI since China imports its crude oil mostly from the middle east and Russia.

Author Response

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Author Response File: Author Response.pdf

Reviewer 2 Report

The authors presnet a research about the relationship between global crude oil futures and biofuel commodities in China. The empirical research is sophisticated and the results reject the oil-commodity neutrality hypothesis for biofuel feedstock commodities. The contribution informs investors' strategy in the market of futures.

I generally consider this paper well prepared. I have two suggestions for the authors.

First, language is often too technical and obscure, uses passive voice, and reiterates concepts. One example is the title, too long and technical.  "The dependence between crude oil and China's biofuel feedstock commodity market" is probably enough.

Second, this topic is of great interenst for Sustainability, yet the conclusion looks more at the financial implications for investiors on the market. I would like to read more, in the introduction and at the end, how this topic relates to sustainability.

 

Author Response

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Author Response File: Author Response.pdf

Reviewer 3 Report

Hau and co-workers investigated the relationship between global crude oil futures and corn ethanol futures across quantile levels. The major conclusion lies in the importance of global crude oil when considering the investment. It is unclear if these findings will be compelling to the field.

Comment 1: Why this research is important to the field? Could authors provide more details? They should also ensure that they provide appropriate and sufficient references in the introduction and discussion sections to support their arguments.

Comment 2: The writing could be improved by using more concise language. For example, instead of "dependence relationship," it might be more accurate to use "dependence" or "relationship" alone.

Author Response

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Author Response File: Author Response.pdf

Reviewer 4 Report

1- The abstract should be rewritten to show the objectives, main findings and comparative values.

2-      The introduction is weak and should be supported with other references.

3-      The figures should be clearly shown.

4-      The discussions of the results should be supported.

5- The abstract should contain values of comparison.

6- The conclusion should be modified to show the main findings.

7-      The references should be updated with references till now.

Author Response

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Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

1. I think the paper should argue the issue where corn, wheat, and soybean use for energy will affect food consumption as well.

2. Liu et al [6](2021) do not mention that China's corn and wheat are the primary feedstocks of biofuel production in China. The paper should use other literature.

3. I think more discussions should be done on why some differences were found among different quantiles.

4. The possible reason for the difference in the risk reduction effectiveness among soybean, corn vs wheat should be discussed.

5. I think only relying on the stationarity tests on ADF is weak. This method is a bit outdated and more advanced types of unit root tests should be performed.

6. I am also not satisfied that the author did not include ethanol or diesel prices in the analysis.

7. The paper should also mention that the prices for feed crops are not the meal prices but it is general crop prices that can be affected by the overall consumption from the food industry.

Author Response

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Thank you very much for reviewing the revised manuscript.

Author Response File: Author Response.pdf

Reviewer 3 Report

Publish as is; no revisions needed.

Author Response

According to the reviewer's opinion“Publish as is; no revisions needed”，we don't need to provide a point-by-point response to this reviewer.

Thank you very much for reviewing the revised manuscript. 

Thank you again. 

Reviewer 4 Report

Accept

Author Response

According to the reviewer's comment 'Accept', we do not need to provide a point-by-point response to this reviewer’s comments.

Thank you very much for reviewing the revised manuscript. 

Thank you again.