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Abstract
A major aspect concerning US rice producers and milling industry has to do with price transmission and the price discovery process among domestic milled rice markets and the international rice market. The paper investigates the dynamic relationships between the US domestic and international rice prices and determines the price discovery process using the vector error correction model (ECM) and the tournament approach using a cluster analysis. Results determine that Arkansas medium grain and California short grain are milled rice price reference or leaders in the U.S. We compare the speed of adjustment coefficients from ECM and find that California short grain has a slight edge over Arkansas medium though this lead may be rather insignificant. Two markets contribute equally in the price discovery process. We test both Arkansas medium and California short against Thai 5% rice export price, a frequent reference of international rice price. Result indicates that Thai 5% slightly leads Arkansas medium but is mildly led by California short. The US market and Thai 5% contribute equally in the price discovery in the international market. Results indicate differences from prior findings that the US rice market is segregated from Asian/international market.