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Price Risk and Exporter Competition in China's Soybean Market

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  • Andrew Muhammad

Abstract

ABSTRACT An import allocation model is used to examine the effects of price risk (variance of prices) on exporter competition in China's soybean market. Price risk is an important determinant of China's soybean imports across sources (Argentina, Brazil, and the United States), even when accounting for other factors. Results indicate that Argentina is the only country affected by own‐price risk in the Chinese market; imports decline by 1.11% for every percentage increase price risk. The estimated risk premium for soybeans from Argentina is 0.44, indicating that if price risk increases by 1%, prices would have to fall by 0.44% for imports to remain unchanged. Price risk in Argentina has a positive effect on China's imports from the United States. Price risk in Brazil has a positive effect on imports from Argentina, but a negative effect on imports from the United States. [EconLit citations: D81, F14, Q11, Q17].

Suggested Citation

  • Andrew Muhammad, 2015. "Price Risk and Exporter Competition in China's Soybean Market," Agribusiness, John Wiley & Sons, Ltd., vol. 31(2), pages 188-197, April.
    • Handle: RePEc:wly:agribz:v:31:y:2015:i:2:p:188-197
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    File URL: http://hdl.handle.net/10.1002/agr.21393
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    Cited by:

    1. Shaobin Zhang & Baofeng Shi, 2024. "The Asymmetric Tail Risk Spillover from the International Soybean Market to China’s Soybean Industry Chain," Agriculture, MDPI, vol. 14(7), pages 1-16, July.

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