‍Demand for soybeans and soybean oil in China—an empirical analysis based on the SDAIDS model

ZHAO Yinyu1 ZHENG Zhihao1

(1.College of Economics and Management, China Agricultural University)

【Abstract】By adopting market data on soybeans and soybean oil in China during 1995–2013 and utilizing the source differentiated AIDS model (the SDAIDS model), this paper carried out a quantitative analysis on the demand for soybeans and soybean oil in China. Results of the study revealed that the soybean market and the soybean oil market were inseparable in China; an incomplete substitutional relationship existed among soybeans and soybean oil from different sources; the expansion of the market of soybeans in China would further spur the aggregate volume of imported soybeans; a competitive relation existed between soybeans produced in China and soybeans from America, Brazil, and Argentina; an increase in the price of soybeans produced in China would restrain the volume of soybeans imported from America, Brazil, and Argentina.

【Keywords】 soybeans; soybean oil; the source differentiated almost ideal demand system (the SDAIDS model); block separability; product aggregation;

【DOI】

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(Translated by HE Lin)

    Footnote

    [1]. ① Data mentioned above are from the website of COMTRADE (http://comtrade.cn.org/data). [^Back]

    [2]. ① As the import volume of bean pulp is much smaller than those of soybeans and soybean oil and it has incomplete data. This paper does not include the demand for bean pulp in the framework of research. [^Back]

    [3]. ② A complete substitutional relation exists among soybeans with different sources, which means that soybeans with different sources are identical in quality and market shares of soybeans with different sources are only dependent on their market prices. For example, if the price of soybeans from America is lower than that of soybeans from other sources and America has an infinite supply capacity, then, the soybean market in China will be entirely occupied by American soybeans. [^Back]

    [4]. ③ Data source: National Bureau of Statistics of the People's Republic of China (eds.). China Statistical Yearbook (over the years), Beijing: China Statistics Press. [^Back]

    [5]. ① The derivation of the SDAIDS model and the corresponding formula for test mainly refers to Yang and Koo (1994) and Hayes et al. (1990). [^Back]

    [6]. ① The website of USDA/FAS: http://apps.fas.usda.gov/psdonline/psdDownload.aspX [^Back]

    [7]. ② The website of cngrain: http://datacenter.cngrain.com/lndexByClass.aspx?ld=3 [^Back]

    [8]. ① It may be because soybean oil from other countries is so little that leads to the abnormality of the estimated value of expenditure elasticity of soybean oil from other countries which is 6.95. Therefore, this kind of expenditure elasticity is not incorporated into the range of discussion below. [^Back]

    [9]. ① In the second part of Table 3 and Table 4, cross-price elasticity of soybean oil from other countries shows abnormal values such as 6.95, -17.45, 35.36, -14.67 and 12.26 which are undiscussed in the analysis. It may be because the import volume of soybean oil from other countries is so little that minuscule changes in the price will cause large fluctuations in import volumes of soybean oil from other countries. [^Back]

    References

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This Article

ISSN:1002-8870

CN: 11-1262/F

Vol , No. 11, Pages 15-28

November 2015

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Article Outline

Abstract

  • 1 Introduction
  • 2 Evolutionary characteristics of the market of soybeans and soybean oil in China
  • 3 The SDAIDS model
  • 4 Data and estimating the model
  • 5 Estimated results
  • 6 Conclusions
  • Footnote

    References