Price Transmission in Global Dairy Markets

The price relationships governing dairy commodity price transmission among the US, Oceania, and EU markets are considered using vector autoregressive (VAR) and vector error correction (VECM) models. Results demonstrate a one-way price relationship for US dry milk powders as price shocks in Oceania and the European Union spread to the United States while US price shocks do not spread into those markets. US prices for cheddar and butter are impacted by price shocks in Oceania and the EU. However, US price shocks also spread into the Oceania market and may reflect potential arbitrage opportunities. Historically thought to be shielded from international prices through low import quotas and high out-of-quota tariffs, these results are the first to empirically demonstrate that US dairy commodity prices are influenced in both the long-run and short-run by international dairy commodity prices.

Issue Date:
Aug 15 2016
Publication Type:
Journal Article
DOI and Other Identifiers:
(ISSN #: 1559-2448) (Other)
Record Identifier:
PURL Identifier:
Published in:
International Food and Agribusiness Management Review, Volume 19, Special Issue B
Page range:
Total Pages:
JEL Codes:
Q11 Q13 Q17 Q18
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Series Statement:
Volume 19
Issue B

 Record created 2017-04-01, last modified 2018-01-23

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