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Price Transmission in Global Dairy Markets

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  • Newton, John

Abstract

The price relationships governing dairy commodity price transmission among the US, Oceania, and EU markets are considered using vector autoregressive (VAR) and vector error correction (VECM) models. Results demonstrate a one-way price relationship for US dry milk powders as price shocks in Oceania and the European Union spread to the United States while US price shocks do not spread into those markets. US prices for cheddar and butter are impacted by price shocks in Oceania and the EU. However, US price shocks also spread into the Oceania market and may reflect potential arbitrage opportunities. Historically thought to be shielded from international prices through low import quotas and high out-of-quota tariffs, these results are the first to empirically demonstrate that US dairy commodity prices are influenced in both the long-run and short-run by international dairy commodity prices.

Suggested Citation

  • Newton, John, 2016. "Price Transmission in Global Dairy Markets," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(B), pages 1-15, August.
    • Handle: RePEc:ags:ifaamr:244616
    DOI: 10.22004/ag.econ.244616
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    4. Rezitis, Anthony N. & Kastner, Gregor, 2021. "On the joint volatility dynamics in international dairy commodity markets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 60(2), January.
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    6. Anthony N. Rezitis & Gregor Kastner, 2021. "On the joint volatility dynamics in dairy markets," Papers 2104.12707, arXiv.org.
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    8. Hillen, J., 2018. "Protecting the Swiss milk market from foreign price shocks: Public border protection vs. quality differentiation," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 276015, International Association of Agricultural Economists.
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