The rise of Soybean in international commodity markets: A quantile investigation.

The complex interplay between agricultural and energy commodities has been a subject of interest in past research, gaining more relevance recently due to geopolitical events such as the conflict between Ukraine and Russia. This conflict has systematically driven up the prices of both energy and agricultural commodities. Deeply understanding the dynamic interconnections between these commodities and the cascading events resulting from the war is crucial for comprehensive market analysis. Our study leverages the connectedness or risk of spillover based on a Quantile Vector Autoregression (QVAR) model, allowing us to track connectedness over time through the examination of extreme quantiles. This approach facilitates the identification of shocks triggered by exogenous events, such as the Russian-Ukrainian war, which are often observable in these extreme quantiles or tails. The investigation encompasses several agricultural commodities: Wheat, Barley, Soybean, Soybean Oil, Soybean Meal, and Sunflower Oil, along with energy commodities represented by Crude Oil and Natural Gas. Furthermore, we considered the prices of crucial fertilizers, DAP & Urea, given their significance in agricultural production. The timeframe for our study extends from January 2010 to January 2023, providing a comprehensive review of market trends during various geopolitical scenarios. This research contributes valuable insights into the intersection of global events, agricultural trends, and energy commodity markets. The study revealed that Soybean and its derivatives consistently play a leading role in the market, with Soybean being the primary shock transmitter. This is particularly true for the upper Quantile, where Soybean and Soybean Meal's influence remains stable. On the other hand, Soybean Oil's, Barley, and Wheat risk of spillover has increased, especially during the Ukraine-Russia conflict. Finally, spillover appears symmetric, with both extreme tails exhibiting around 91-87 % connectedness, while the median Quantile is under 49 %. We observed a diminution in network complexity, manifested as a decline in network connectedness, in correlation with extreme quantiles. Policymakers can use this information to draft proactive measures, ensuring stability and sustainability in both domestic and international markets.

Leadership shift in the global soybean market: Dynamic connectedness approach (TVP-VAR).

The price transmission in international soybean market has been extensively examined. However, recent econometric advancements have enabled the application of dynamic connectedness methodology as outlined by Antonakakis and Gabauer (2017) [1], which is based on a Time-varying Parameter Vector Autoregressive (TVP-VAR) model. This approach captures the time-varying connectedness of time series, considering potential risk shock emitters and receivers. The connectedness index (Diebold and Yilmaz, Jan. 2012) [2] was developed using Generalized Forecast Error Variance Decomposition (GFEVD) and the Generalized Impulse Response Function (GIRF) (Koop et al., Sep. 1996; Pesaran and Shin, Jan. 1998) [3,4]. This study aims to understand the dynamic connectedness and price leadership. The research examined markets including the US Soybean futures market (Chicago Board of Trade), Rotterdam Port spot market representing the European soybean market, Paranaguá port representing Brazil, Argentina represented by Rosario Futures and Spot, and the Chinese domestic spot market and the Dalian futures on behalf of China. The research spanned approximately ten years, from September 2009 to May 2019. The findings suggest that the soybean market has reached a high level of maturity, able to withstand exogenous shocks for at least the past seven years. The net pairwise directional connectedness revealed dynamic and bidirectional causality. The dynamic connectedness index showed a highly connected and developed market in the West (Chicago Futures, Rotterdam, Paranaguá, and Rosario Futures and Spot). However, the connectedness between Western and Eastern markets was relatively low, indicating some level of market isolation. Furthermore, the pairwise connectedness index between Eastern market (China spot and Dalian Futures) was also considerable low. Lastly, Paranaguá and Rosario overtook Rotterdam as price-leading markets and were identified as the primary net transmitters of shocks, indirectly implying causality. Chicago, Rosario, and Paranaguá formed a triumvirate leading international prices, while Rotterdam adopted a secondary leading position, deviating from its historical role as the price leader.

Economics of field size and shape for autonomous crop machines.

Field size and shape constrain spatial and temporal management of agriculture with implications for farm profitability, field biodiversity and environmental performance. Large, conventional equipment struggles to farm small, irregularly shaped fields efficiently. The study hypothesized that autonomous crop machines would make it possible to farm small, non-rectangular fields profitably, thereby preserving field biodiversity and other environmental benefits. Using the experience of the Hands Free Hectare (HFH) demonstration project, this study developed algorithms to estimate field times (h/ha) and field efficiency (%) subject to field size and shape in grain-oil-seed farms of the United Kingdom using four different equipment sets. Results show that field size and shape had a substantial impact on technical and economic performance of all equipment sets, but autonomous machines were able to farm small 1 ha rectangular and non-rectangular fields profitably. Small fields with equipment of all sizes and types required more time, but for HFH equipment sets field size and shape had least impact. Solutions of HFH linear programming model show that autonomous machines decreased wheat production cost by €15/ton to €29/ton and €24/ton to €46/ton for small rectangular and non-rectangular fields respectively, but larger 112 kW and 221 kW equipment with human operators was not profitable for small fields. Sensitivity testing shows that the farms using autonomous machines adapted easily and profitably to scenarios with increasing wage rates and reduced labour availability, whilst farms with conventional equipment struggled. Technical and economic feasibility in small fields imply that autonomous machines could facilitate biodiversity and improve environmental performance. Supplementary Information: The online version contains supplementary material available at 10.1007/s11119-023-10016-w.

Economics of autonomous equipment for arable farms.

By collecting more data at a higher resolution and by creating the capacity to implement detailed crop management, autonomous crop equipment has the potential to revolutionise precision agriculture (PA), but unless farmers find autonomous equipment profitable it is unlikely to be widely adopted. The objective of this study was to identify the potential economic implications of autonomous crop equipment for arable agriculture using a grain-oilseed farm in the United Kingdom as an example. The study is possible because the Hands Free Hectare (HFH) demonstration project at Harper Adams University has produced grain with autonomous equipment since 2017. That practical experience showed the technical feasibility of autonomous grain production and provides parameters for farm-level linear programming (LP) to estimate farm management opportunities when autonomous equipment is available. The study shows that arable crop production with autonomous equipment is technically and economically feasible, allowing medium size farms to approach minimum per unit production cost levels. The ability to achieve minimum production costs at relatively modest farm size means that the pressure to "get big or get out" will diminish. Costs of production that are internationally competitive will mean reduced need for government subsidies and greater independence for farmers. The ability of autonomous equipment to achieve minimum production costs even on small, irregularly shaped fields will improve environmental performance of crop agriculture by reducing pressure to remove hedges, fell infield trees and enlarge fields. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s11119-021-09822-x.