How Have Oilseed Relative Price Relationships Changed Over Time?

Authors

  • K. Aleks Schaefer Department of Agricultural Economics, Oklahoma State University, Stillwater, Oklahoma, USA
  • Robert J. Myers Department of Agricultural, Food and Resource Economics, Michigan State University, East Lansing, Michigan, USA
  • Stanley R. Johnson National Center for Food and Agricultural Policy, Washington, D.C., USA
  • Michael D. Helmar National Center for Food and Agricultural Policy, Washington, D.C., USA
  • Tony Radich USDA Office of the Chief Economist, Office of Energy and Environmental Policy, Washington, D.C., USA

Keywords:

oilseeds, relative prices, biodiesel policy, trans fat labeling

Abstract

This paper uses econometric modeling to assess how relative price relationships in the international oilseed system, including those for soy, canola, palm, and sunflower oil, have changed over time. We find that structural change in the international oilseed price system aligns strongly with the timing of mandates on the labeling of trans fats and international policy efforts to promote biodiesel production. Our results indicate that—following an initial adjustment period—price premiums for sunseed oil and canola oil increased by 28% and 4%, respectively, relative to soy oil. We also find that—prior to the boom in biodiesel production and trans-fat labeling requirements—no long-run co-integrating relationship existed between palm oil prices and those for other oilseeds. However, in the wake of these changes, palm oil prices are now strongly co-integrated with other oilseed prices.

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Published

2021-12-13

Issue

Vol. 23 No. 1 (2021): AgBioForum, Volume 23, Number 1, 2021

Section

Original Article