Files

Abstract

The grain/oilseed industry is undergoing considerable structural change in the form of mergers and the addition of new processing facilities to add value beyond commodity grade. The rapid structural changes in this industry call into question the relevance of previous research conducted in these areas. Focusing on two structural change events in northeast Missouri as case studies provides an incisive glimpse at the larger impact of structural change on the grain/oilseed industry. This study addresses the merger of Archer Daniels Midland and Quincy Grain, and the opening of a producer-owned ethanol plant in northeast Missouri to determine if these structural change events altered pricing patterns and linkages in Missouri grain/oilseed markets, and assess the need for re-specification of conventional economic models for price analysis in cases of potential structural change. This research utilizes a three-tier statistical analysis of cointegration tests, Flexible Least Squares analysis, and impulse response functions derived from Vector Autoregressive modeling to investigate the Law of One Price and price relationships among four Missouri grain/oilseed markets. The results are consistent with the Law of One Price, supporting the ideology that markets work, and implying that localized structural change may not significantly affect research shelf-life.

Details

PDF

Statistics

from
to
Export
Download Full History