Impacts of the U.S. subsidy to soybeans on World prices, production and exports

Brandão, Antônio Salazar P.; Lima, Elcyon Caiado Rocha

Impacts of the U.S. subsidy to soybeans on World prices, production and exports

Brandão, Antônio Salazar P. | Lima, Elcyon Caiado Rocha

This paper specifies and estimates an econometric model of the soybean market (grain, oil and meal) to assess the effects of U.S. domestic support to soybeans on world soybean prices, production and exports. The model divides the world into five regions (modules): Argentina, Brazil, the European Union, the United States (US) and the Rest of the World (ROW). There are interactions between the modules through the international prices and the net exports of each soybean product. The international prices of grain, oil and meal are endogenous and are determined equating net exports of the first four modules (Argentina, Brazil, European Union and the U.S.) to net imports of the ROW. The analysis is conducted eliminating the U.S. domestic support to soybeans and simulating the impacts on the variables of interest. The simulations show a significant impact of the US subsidy to soybeans on world prices and net exports of the four selected regions.

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