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Abstract
Although various topics related to genetically modified (GM) technology have been studied worldwide, few studies have investigated the price impact of genetically modified food events. This paper contributes to the literature by examining the price effects of multiple genetically modified corn contamination events in the U.S. corn market. Using the relative price of substitutes method and the time-varying cointegration, we identify at least three possible structural breaks relevant to the genetically modified corn contamination events. Our empirical results suggest that MIR162 is the largest and longest GM-related break, but notice this break was initially influenced by changes in U.S. corn and sorghum supply, and EPA’s proposed reduction of the ethanol mandate. China’s rejection of U.S. corn and its substantial imports of U.S sorghum protracted the depression of U.S. corn relative to sorghum until late 2014. Commodity market participants, policy makers and researchers can apply the finding and approach of this paper for anticipating the price impacts of multiple shocks in the commodity markets.