IDEAS home Printed from https://ideas.repec.org/a/eee/jocoma/v31y2023ics2405851322000472.html
   My bibliography  Save this article

Logistics competition between the U.S. and Brazil for soybean shipments to China: An optimized Monte Carlo simulation approach

Author

Listed:
  • Kamrud, Gwen
  • Wilson, William W.
  • Bullock, David W.

Abstract

The United States and Brazil fiercely compete with each other in the Chinese soybean import market. Logistical functions and costs are volatile and risky and influence the export competition between the two countries. This study analyzes commodity trading strategies and the effect of logistical functions and costs in the United States and Brazil for shipments to China using an Optimized Monte Carlo Simulation model accounting for a large number of random and correlated variables. Base case results approximate the actual monthly data between 2013 and 2019. These results indicate that the United States captures a larger share of soybean export shipments between December and March while Brazil is dominant from April to November. Sensitivity analyses were performed on logistical variables in the United States (ocean shipping costs, U.S. secondary rail car market, and rail unload incentives) and Brazil (improving logistical infrastructure and wait times) to illustrate their impacts on optimal trading strategies.

Suggested Citation

  • Kamrud, Gwen & Wilson, William W. & Bullock, David W., 2023. "Logistics competition between the U.S. and Brazil for soybean shipments to China: An optimized Monte Carlo simulation approach," Journal of Commodity Markets, Elsevier, vol. 31(C).
    • Handle: RePEc:eee:jocoma:v:31:y:2023:i:c:s2405851322000472
    DOI: 10.1016/j.jcomm.2022.100290
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2405851322000472
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jcomm.2022.100290?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. William W. Wilson & Bruce Dahl, 2011. "Grain pricing and transportation: dynamics and changes in markets," Agribusiness, John Wiley & Sons, Ltd., vol. 27(4), pages 420-434, September.
    2. Wilson, William W & Bullock, David & Lakkakula, Prithviraj, 2020. "Dynamic Changes in Rail Shipping Mechanisms for Grain," AE Series 302409, North Dakota State University, Department of Agribusiness and Applied Economics.
    3. Mckenzie, Andrew M. & Isbell, Bradley J. & Brorsen, B. Wade, 2019. "The Cost Of Forward Contracting In The Cif Nola Export Bid Market," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 51(1), pages 164-181, February.
    4. Zhang, Rui (Carolyn) & Houston, Jack E., 2005. "Effects of Price Volatility and Surging South American Soybean Production on Short-run Soybean Basis Dynamics," 2005 Conference, April 18-19, 2005, St. Louis, Missouri 19038, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    5. Caves, Richard, 1977. "Organization, Scale, And Performance In The Grain Trading Industry," Harvard Institute of Economic Research (HIER) Archive 294561, Harvard University, Department of Economics.
    6. Bullock, David W. & Wilson, William W., 2020. "Factors Influencing the Gulf and Pacific Northwest Soybean Export Basis: An Exploratory Statistical Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 45(2), March.
    7. Skadberg, Kristopher & Wilson, William W. & Larsen, Ryan & Dahl, Bruce, 2015. "Spatial Competition, Arbitrage, and Risk in U.S. Soybeans," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(3), pages 1-15, September.
    8. Andrew M. McKenzie, 2005. "The effects of barge shocks on soybean basis levels in Arkansas: A study of market integration," Agribusiness, John Wiley & Sons, Ltd., vol. 21(1), pages 37-52.
    9. Caves, Richard E., 1977. "Organization, Scale, and Performance of the Grain Trade," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 16(3), pages 1-18.
    10. Wilson, William W., 2020. "Dynamic Changes in Rail Shipping Mechanisms for Grain," AE Series 303743, North Dakota State University, Department of Agribusiness and Applied Economics.
    11. Lakkakula, Prithviraj & Wilson, William, 2021. "Origin and Export Basis Interdependencies in Soybeans: A Panel Data Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 46(1), January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Minglian Lin & Indranil SenGupta & William Wilson, 2023. "Estimation of VaR with jump process: application in corn and soybean markets," Papers 2311.00832, arXiv.org, revised Dec 2023.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. William Wilson & Prithviraj Lakkakula, 2021. "Secondary rail car markets for grain transportation and basis values," Agribusiness, John Wiley & Sons, Ltd., vol. 37(3), pages 472-488, July.
    2. Scheresky, Gwen & Wilson, William W. & Bullock, David W., 2021. "Spatial and Logistical Competition for Shipments to China from the United States and Brazil," AE Series 320807, North Dakota State University, Department of Agribusiness and Applied Economics.
    3. Bradley Isbell & Andrew M. McKenzie & B. Wade Brorsen, 2020. "The cost of forward contracting in the Mississippi barge freight river market," Agribusiness, John Wiley & Sons, Ltd., vol. 36(2), pages 226-241, April.
    4. Stephan Johansen & William Wilson, 2019. "Valuing switching options in international grain marketing," Agribusiness, John Wiley & Sons, Ltd., vol. 35(3), pages 423-438, July.
    5. Javier Ho & Paul Bernal, 2021. "Estimating a global demand model for soybean traffic through the Panama Canal," Journal of Shipping and Trade, Springer, vol. 6(1), pages 1-23, December.
    6. William W. Wilson & Bruce L. Dahl, 2004. "Transparency and Bidding Competition in International Wheat Trade," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 52(1), pages 89-105, March.
    7. Wilson, William & Lakkakula, Prithviraj & Bullock, David, . "Implications of the Russian Invasion on the Logistical Competition for Corn Shipments from the United States and Ukraine," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 49(1).
    8. Jeffrey M. Perloff & Gordon C. Rausser, 1983. "The Effect of Asymmetrically Held Information and Market Power in Agricultural Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 366-372.
    9. W. Mark Brown & Shon M. Ferguson & Crina Viju‐Miljusevic, 2020. "Farm Size, Technology Adoption and Agricultural Trade Reform: Evidence from Canada," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 676-697, September.
    10. Meyer, Seth D. & Kruse, John, 2007. "Factors Affecting Locking Times at 600 ft. and 1,200 ft. Locks on the Mississippi River with an Examination of Excessive Locking Time Charges," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 46(3).
    11. James B. Bushnell & Jonathan E. Hughes & Aaron Smith, 2017. "Food vs. Fuel? Impacts of Petroleum Shipments on Agricultural Prices," NBER Working Papers 23924, National Bureau of Economic Research, Inc.
    12. Patterson, Paul M & Abbott, Philip C, 1994. "Further Evidence on Competition in the US Grain Export Trade," Journal of Industrial Economics, Wiley Blackwell, vol. 42(4), pages 429-437, December.
    13. Mahalingam, Nalini & Schrader, Lee F., 1993. "Export Marketing Strategies: An Analysis of Firm Activity in Eggs, Cereals, and Apple Juice," Occasional Papers 233155, Regional Research Project NC-194: Organization and Performance of World Food Systems.
    14. Wilson, William W. & Dahl, Bruce L., 1999. "Transnational Grain Firms: Evolution And Strategies In North America," Agricultural Economics Reports 23278, North Dakota State University, Department of Agribusiness and Applied Economics.
    15. Lower, Marcus E. & Baldwin, E. Dean & Larson, Donald W. & Thraen, Cameron S., 1982. "A Discriminant Analysis of Grain Market Structure in Selected States," 1982 Annual Meeting, August 1-4, Logan, Utah 279217, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Chambers, Robert G. & Paarlberg, Philip L., 1989. "Are More Exports Always Better?: Comparing Cash and In-Kind Export Subsidies," Working Papers 197606, University of Maryland, Department of Agricultural and Resource Economics.
    17. Margherita Scoppola, 1996. "Entreprises multinationales et politiques nationales sur les marchés agricoles mondiaux," Économie rurale, Programme National Persée, vol. 234(1), pages 54-57.
    18. Margherita Scoppola, 2007. "Economies of scale and market structure in international grain trade," Agricultural Economics, International Association of Agricultural Economists, vol. 37(2‐3), pages 277-291, September.
    19. Woodard, Joshua & Dutta, Tridib & Xue, Lin, 2016. "Impacts of Futures Markets Speculation and Rail Transportation Networks on Commodity Basis Behavior," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236159, Agricultural and Applied Economics Association.
    20. Patterson, Paul M. & Abbott, Philip C. & Stiegert, Kyle W., 1996. "The Export Enhancement Program'S Influence On Firm-Level Competition In International Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(1), pages 1-12, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jocoma:v:31:y:2023:i:c:s2405851322000472. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jcomm .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.