Export Demand Estimation for U.S. Corn and Soybeans to Major Destinations

The United States is the leading producer and exporter of corn and soybeans in the world. The United States exports 20% of the world’s corn and 30% of the world’s soybeans every year. In this study, we empirically estimate the export demand of U.S. corn and soybeans to three main destinations, China, Japan, and EU, in the current context of energy and agriculture linkages and production of ethanol from corn. A log-linear equation is used to estimate the export demand estimation of U.S. corn and soybeans. Data for the U.S. and its three main importer markets were gathered for the 1980-2011 period. The results of the logarithmic model estimates showed that china had the most elastic demand. China has the highest income elasticity of 2.5, while the income elasticity for Japan and EU were close to 1. The parameter estimates for price of soybean as a cross price was significant for China and EU, and parameter estimates for price of corn as a cross price was significant only for Japan. The positive sign revealed soybeans and corn to be substitutes in those countries