Research Reports
Analysis of World Grain Market and Operation of World Grain Market Information System
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AuthorSung, Myunghwan
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Publication Date2013.12.30
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Original
Background of Research
The objective of this study is to provide various information on world grain market to policy makers and related industries. For this objective, development of world grain price prediction model, causal relationship on domestic and international price gaps and effect of international grain price fluctuations on domestic prices are analyzed. Meanwhile, major information on world grain market is provided in the Korea Rural Economic Institute's World Grain Market Website.
Method of Research
This study is divided into two parts. First is research part for world grain market analysis and second is operational part to provide related information to the world grain market information system. Hypothetical grain price fluctuations are analyzed by exporting countries through a scenario analysis. To predict world grain prices, a VAR model which is a multivariate time series technique is used to develop a predicting model for wheat, corn and soybean. World grain information system's operational part maintains their system by adding and supplementing detailed information step by step and publications “World Grain Market” periodically.
Research Results and Implications
Medium and long term world grain supply-demand prediction shows that production and consumption will make demand-supply balance. However, the range of fluctuation on yearly production is increasing due to recent climate changes. Exporter/importers' policy changes according to production fall and global economic changes are also causing imbalance in supply and demand.
According to the results of world grain market scenario analysis, the price elasticity of international soybean price to Chinese soybean import is 0.44. Since year 2004/05, the rise in Chinese meat consumption has increased international soybean price by 27.8$/t during 8 years. Price elasticity of international corn price to U.S. corn (Bio ethanol) import is 0.15. Since year 2004/05, corn price rose 7.9$/t during 8 years. The price elasticity of international soybean and corn prices to Brazil production is 0.8 and 0.1 respectively. Since year 2004/05, international soybean and corn price fell 48$/t and 4.6$/t each during 8 years. The price elasticity of international wheat to Australian wheat output is 0.1. The deteriorating weather increased the wheat price by 10$/t since year 2004/05 for 8 years.
To operate international grain information system, we need to examine methods to provide information, review composition of contents and improve ways to deliver suitable situation of domestic grains. Also, we need to satisfy users' information demands and conduct surveys to understand users' needs on processing information.
Through above research, we must reinforce abilities to react on repeated rise and falls of world grain prices. We need to deliver accurate information of world grain price fluctuations, construct international grain price prediction models for related industries and consumers, and help to react in sudden changes. Meanwhile, we must aim to manage grain prices for domestic price stabilization and diversify transaction methods to stabilize primary agricultural product prices to stabilize domestic food consumption market.
Researchers: Myung-Hwan Sung, Suk-Ho Han, Mi-Yeon Son, Won-Yong Kim, Ki-Ho Jeong
Research Period: 2013. 1～2013. 12
E-mail address: Myung-Hwan Sung(mhsung@krei.re.kr
Suk-Ho Han(shohan@krei.re.kr
Mi-Yeon Son(sonmy@krei.re.kr)
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