Decomposition of soybean price variations in state of Mato Grosso from 1996 to 2012

Abstract

This study aimed to decompose soybean price variations in state of Mato Grosso, Brazil in three effects – international price, exchange rate and internal effect, from 1996 to 2012, using the internacioshift-share model. The results showed that the international price effect was the main effect in eight of the sixteen years studied. In two of them, this effect contributed to the reduction in the domestic price. The exchange rate effect prevailed over the others in five years – two in the positive direction, and three in the negative direction in relation to the domestic price. On the other hand, the internal effect was negative in ten of the sixteen years considered; however, in three of them, this effect was the largest contributor to the formation of soybean domestic price in Mato Grosso in a positive way. It was concluded that the international price is the main driver for the composition of soybean price in Mato Grosso; the devaluation of the real against the dollar and the consequent increase in the domestic price of soybeans justify the interest of soybean producers in the depreciation of the exchange rate; and the negative sign of the internal effect in most years highlights the unfavorable logistics conditions of Mato Grosso and Brazil, and the lack of policies directed to the productive sector of soybean.