Physical and Economic Distance in US Soybean Markets

Ivan Flores and Joseph Janzen

No 379024, 2023 Conference, April 24-25, 2023, St. Louis, Missouri from NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: We analyze the shock to US soybean prices in the fall of 2022 caused by drought-induced low water levels on the Mississippi River. We consider how the effects of this shock varied by location relative to observed year-to-year changes in soybean production which were also a function of weather conditions. Both production and supply chain shocks create relative changes in physical and economic distance between soybeans production and end-use locations, especially export terminals at the Gulf of Mexico. We use differences in local soybean prices or basis as a measure of economic distance, we estimate a spatial difference in differences model to understand the relationship between physical and economic distance specifically related to the supply chain shock. Our results show evidence that, on average, physical proximity to the Mississippi river weakened basis by 2.13 cents per bushel of soybeans.

Keywords: Agricultural and Food Policy; Demand and Price Analysis (search for similar items in EconPapers)
Pages: 23
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nccc23:379024

DOI: 10.22004/ag.econ.379024

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