The Market Structure and Price Transmission in the U.S. Corn Exporting Process

The purpose of this paper is to analyse the relationship between the market structure of the corn exporting industry in the U.S. and the price transmission from corn cash prices at the export ports in the U.S. Gulf to CIF prices at the import ports in Japan. Based on the arguments of Asymmetric Price Transmission (APT), the market share of the U.S. grain exporting companies is investigated in order to illustrate the market structure, and the price transmission is estimated by applying the Threshold Autoregressive (TAR）Model and M (Momentum)-TAR Model. The main conclusions are as follows. The market concentration was relatively small in the 1980s and the first half of 1990s due to restructuring and consolidation of grain exporting companies. In the last half of 1990s and the 2000s, however, the market became less competitive and the market concentration got larger. The inference results using TAR and M-TAR models show that corn prices were transmitted more rapidly when the input-output price differences were squeezed than when they were stretched, which is so called positive APT, in the sample of the last half of 1990s and the 2000s, although the corn prices were transmitted symmetrically in the sample of the 1980s and the first half of 1990s. The Error Correction Model (ECM), in which the results of inferences by using TAR and M-TAR models were incorporated, was applied to find which factors have impacts on CIF import price changes. It was revealed that the Gulf cash prices mainly 3 months ago and the ocean freight rates 2-3 months ago most significantly affected the changes in CIF prices.