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Spatial Price Transmission and Price Dynamics of Global Butter Export Market under Economic Shocks

Author

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  • Huidan Xue

    (School of Economics and Management, Beijing University of Technology, Beijing 100124, China)

  • Chenguang Li

    (School of Agriculture and Food Science, University College Dublin, National University of Ireland, Belfield, D04 V1W8 Dublin, Ireland)

  • Liming Wang

    (School of Economics and Management, Beijing University of Technology, Beijing 100124, China
    Irish Institute for Chinese Studies, University College Dublin, D04 V18 Dublin, Ireland)

  • Wen-Hao Su

    (College of Engineering, China Agricultural University, Beijing 100083, China)

Abstract

Recently, the world has experienced striking economic and policy changes, and subsequent uncertainties have impacts on dairy trade price fluctuations. The Global Vector Autoregressive (GVAR) methodology was established in this paper to better understand international butter export prices transmission, the feedback between the economic context changes and price fluctuations, and the link between the global butter market, energy market, and other commodity markets. We assessed which key factors are typically associated with butter export price movements with regards to shocks to crude oil price, palm oil price, farm-gate raw milk price, exchange rates, and consumer price index (CPI) for food of the EU, New Zealand, the U.S., and the rest of world (RoW), respectively. Using generalized impulse response functions, this study found that decreases in farm-gate raw milk price could be swiftly transmitted to butter export prices of not only a home country but other foreign countries. However, palm oil price and crude oil price merely affects global butter export prices. We also found that U.S. dollar depreciations against the Euro will cause a decline in U.S. butter export price. It is concluded that butter export markets are not well-integrated, yet butter export prices of New Zealand and the U.S. are highly linked.

Suggested Citation

  • Huidan Xue & Chenguang Li & Liming Wang & Wen-Hao Su, 2021. "Spatial Price Transmission and Price Dynamics of Global Butter Export Market under Economic Shocks," Sustainability, MDPI, vol. 13(16), pages 1-24, August.
  • Handle: RePEc:gam:jsusta:v:13:y:2021:i:16:p:9297-:d:617223
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