Analysis of the European Union’s grain sorghum import demand and its impact on the world’s grain sorghum trade

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2012-08

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Abstract

The European Union sporadically imports large quantities of grain sorghum from the United States, causing trade distortion among the U.S., Mexico, and Japan, currently the only "large trading countries" of grain sorghum. The objective of this project is to analyze the causes of the European Union's (EU) irregular large import demand of grain sorghum, and to develop import demand and probability econometric models in order to estimate their future grain sorghum demand. Single import demand and probability equations were solved using ordinary least squares (OLS) and logit regressions, respectively. Estimated parameters have the expected sign, are large in magnitude and statistically significant. After the models' validation, their results were used in conjunction with the Texas Tech University's Grain Sorghum Model (TTUGSM) in order to forecast the impact of the EU's occasionally large grain sorghum import demand on U.S. sorghum exports to Mexico and Japan, and U.S. sorghum price. The forecast period was from 2012 to 2022. Previous validation of TTUGSM indicates the model's capability to estimate grain sorghum trade among the U.S. Mexico, and Japan, meaning that our findings accurately take into consideration the effect of the EU's intermittent presence on world's grain sorghum market

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