Price Differential Characteristics among Major World Grain Products from 1961 to 2009

Abstract

international grain trade is an important mechanism for achieving an efficient balance between grain supply and demand and for realizing food security. price differential characteristics of the world grain trade reflect the integration of the international grain market. This article summarizes the characteristics of integration associated with the world grain trade through the application of convergence test principal - The Law of One Price. This article aims to analyze the time series evolving trend and the inter-continental differential characteristics of the four major grain products, i.e., wheat, maize, rice and soybean, between 1961 and 2009 and arrive at two conclusions. First, from the global perspective, there is reverse globalization in the grain trade and a difference in the level of integration among different grain products. In particular, the price differentials of wheat and rice are larger than those of soybean and maize. Second, as far as continental trade is concerned, Europe and North America have higher levels of integration in their grain trades than other regions. At present, global integration of grain trade is developing slowly. At the current stage, the promotion of grain trade integration should be coupled with regional integration. Active measures are needed to put regional institutions into full use and to break down inter- and intra- regional trade barriers in grain trade.