Abstract
Ukraine (UA) is one of the world-leading countries in sunflower oil production and sunflower oil exports. Due to the increasing demand caused by biofuel regulations, the European Union (EU) remains the key importer of Ukrainian sunflower oil. Therefore, the aim of the proposed research is to provide an evaluation of the time-varying integration of the UA sunflower oil market with the EU market. To fulfill this goal, first, the trends in sunflower oil production and exports in Ukraine as well as trade regulations are presented. The market integration was assessed using the ARDL-ECM approach that was applied to weekly sunflower oil prices in the period from 2000 to 2020. The analytical study was supplemented with the Toda-Yamamoto (T-Y) Granger causality test, the Bai-Perron multiple structural breakpoint test (B-P) as well as impulse response functions (IRF). This study and the obtained results for the whole sample confirm the presence of a long-run relationship between EU and UA prices. The EU prices are the Granger cause for UA prices, as it is shown in the T-Y test. The Bai-Perron test indicates the existence of multiple structural breaks that can be justified by the market condition and policy modifications. Both the long- and the short-run response of UA prices to changes in EU prices vary significantly in different sub-periods.
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