Estimation of Demand for Wheat by Classes for the United States and the European Union,” Agricultural and Resource Economics Review 28(2

This study estimates demand for wheat differentiated by classes using a dynamic AIDS model for the United States and the European Union (EU). The results suggest that imported wheat is more price responsive than domestic wheat in the U.S. market but not in the EU market. This may suggest that the Canadian policy that reduces prices of Canadian wheat in the U.S. market or U.S. export subsidies that raise prices of U.S, wheat could be expected to give rise to substmtial substitution of Canadian for U.S. wheat. It is also found that in the EU, complementary relationships exist between spring and other wheat groups, This complementary relationship between the lower and higher quality wheat in tbe EU is not surprising because EU millers blend cheaper wheat such as EU common wheat and U.S. other wheat with high protein (spring) to obtain the preferred characteristics. The world wheat market is one of the most widely studied commodity markets (McCalla; Alaouze, Watson, and Sturgess; Wilson, Koo, and Carter; and many others). Despite this interest, it remains one of the most controversial commodity market