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Market Integration in the International Market of Soybeans: Are GM Soy and Non-GM Soy Markets Integrated?

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  • Guillermo Andrés Larre

Abstract

This paper aims to study market integration in the international trade of soybeans from 1999 to 2019. The hypothesis is that the market remained integrated between genetically modified (GM) and non-GM soy, even after stringent regulations against GM soy in major importers starting in 1999. Using FOB prices from major exporters of GM soy (USA and Argentina) and non-GM soy (Brazil), I test for market integration with cointegration analysis and Granger causality tests. All tests show that the market between all three exporters remained integrated throughout the sample period. Furthermore, Granger causality tests show that USA remains the sole price leader. Short run elasticities for reactions to American price changes in Brazil and Argentina are 0.33 and 0.25, respectively. The results validate the Law of One Price and inform policy decisions and forecasts efforts in this valuable commodity.

Suggested Citation

  • Guillermo Andrés Larre, 2024. "Market Integration in the International Market of Soybeans: Are GM Soy and Non-GM Soy Markets Integrated?," Journal of Agricultural Science, Canadian Center of Science and Education, vol. 11(15), pages 1-14, April.
    • Handle: RePEc:ibn:jasjnl:v:11:y:2024:i:15:p:14
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    References listed on IDEAS

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    1. Pier Giorgio Ardeni, 1989. "Does the Law of One Price Really Hold for Commodity Prices?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(3), pages 661-669.
    2. Bruce Jianhe Liu & Yubin Wang & Jingjing Wang & Xin Wu & Shu Zhang, 2015. "Is China the price taker in soybean futures?," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 7(3), pages 389-404, September.
    3. Zapata, Hector O & Rambaldi, Alicia N, 1997. "Monte Carlo Evidence on Cointegration and Causation," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(2), pages 285-298, May.
    4. Bruce Jianhe Liu & Yubin Wang & Jingjing Wang & Xin Wu & Shu Zhang, 2015. "Is China the price taker in soybean futures?," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 7(3), pages 389-404, September.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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