Seasonal Soybean Price Transmission between the U.S. and Brazil Using the Seasonal Regime-Dependent Vector Error Correction Model
1
Korea Rural Economic Institute, 601, Bitgaram-ro, Naju-si, Jellanam-do 58321, Korea
2
Food and Agricultural Policy and Research Institute, University of Missouri, 200 Mumford Hall, Columbia, MO 65211, USA
*
Author to whom correspondence should be addressed.
Sustainability 2019, 11(19), 5315; https://doi.org/10.3390/su11195315
Received: 28 August 2019 / Revised: 20 September 2019 / Accepted: 20 September 2019 / Published: 26 September 2019
Soybean production and trade in the U.S. and Brazil are seasonal. Our research question is whether the seasonal tendencies cause the price relationship between U.S. and Brazilian soybean prices. Therefore, the objective is to test for seasonality in the price transmission between the U.S. and Brazil soybean prices using the seasonal regime-dependent vector error correction model (VECM). Our results show that the speed of the adjustment for the U.S. soybean price in the first half of the year is greater than the speed of the adjustment for the Brazilian soybean price. However, the pattern of their responses becomes the reverse in the second half of the year. The component share calculated by the result of the VECM with seasonal effects indicates that the U.S. dominates the world soybean market during the second half of the year while Brazil is dominant in the soybean market in the first half of the year. These results give us an important finding that we could not find using the VECM without seasonal effects. Finally, our results imply that the seasonal pattern of production in the U.S. and Brazil could cause the sustainability of the supply chain in the world soybean market.
View Full-Text
▼
Show Figures
Figure 1
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited
MDPI and ACS Style
Soon, B.M.; Whistance, J. Seasonal Soybean Price Transmission between the U.S. and Brazil Using the Seasonal Regime-Dependent Vector Error Correction Model. Sustainability 2019, 11, 5315. https://doi.org/10.3390/su11195315
AMA Style
Soon BM, Whistance J. Seasonal Soybean Price Transmission between the U.S. and Brazil Using the Seasonal Regime-Dependent Vector Error Correction Model. Sustainability. 2019; 11(19):5315. https://doi.org/10.3390/su11195315
Chicago/Turabian StyleSoon, Byung M., and Jarrett Whistance. 2019. "Seasonal Soybean Price Transmission between the U.S. and Brazil Using the Seasonal Regime-Dependent Vector Error Correction Model" Sustainability 11, no. 19: 5315. https://doi.org/10.3390/su11195315
Find Other Styles
Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.
