Prices and soybean complex in China and the USA

Abstract

This study aims to assess the level of integration in the prices of grain, meal and soybean oil, among the stock exchanges of the two major players in the international market, the United States and China. With the integration of Chinese markets to the rest of the world, after the period of economic reform, it was promoted a better environment for managing price risk, thereby improving the overall planning of the production chain, which increased the competitiveness and facilitated price discovery. The results indicated that the future market of grain and its byproducts from China tends to follow the formation of future prices of the American stock market of these products. Granger causality test, within the Chinese market, registered a single influence, the soybean influencing the price of soybean meal in this country. The results of the application of modeling MCE demonstrated that if future prices in the United States increased, the increase would be transmitted to the Chinese stock market on the same day and with a lag of up to three days, however, the intensity of transmission would be low. Therefore, the results reinforced the finding of American leadership in the future market of soybean and its byproducts in the formation of international prices.