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Price Risk and Exporter Competition in China's Soybean Market
Author(s) -
Muhammad Andrew
Publication year - 2014
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/agr.21393
Subject(s) - economics , china , econlit , competition (biology) , price risk , monetary economics , international economics , financial economics , geography , futures contract , ecology , archaeology , medline , political science , law , biology
An import allocation model is used to examine the effects of price risk (variance of prices) on exporter competition in China's soybean market. Price risk is an important determinant of China's soybean imports across sources (Argentina, Brazil, and the United States), even when accounting for other factors. Results indicate that Argentina is the only country affected by own‐price risk in the Chinese market; imports decline by 1.11% for every percentage increase price risk. The estimated risk premium for soybeans from Argentina is 0.44, indicating that if price risk increases by 1%, prices would have to fall by 0.44% for imports to remain unchanged. Price risk in Argentina has a positive effect on China's imports from the United States. Price risk in Brazil has a positive effect on imports from Argentina, but a negative effect on imports from the United States. [EconLit citations: D81, F14, Q11, Q17].