DETERMINANTS OF TRADE FLOWS OF AGRICULTURAL PRODUCTS BETWEEN BRAZIL AND CHINA: THE CASE OF SOY

Abstract

This paper aims at analyzing the main determinants of Brazilian agricultural exports to China, in particular, the soybeans that represented on average 86.0% of Brazil's exports to the Chinese market between March 2001 and March 2009. China is one of the countries that increased agricultural imports in recent years importing about 53.7% of world soybean between 2001 and 2009, while during the same period Brazil was the second largest producer in the world with almost 30.0% of production and 37.0% of world exports. In this work, besides the Chinese income, were considered variables: price of soybean exports and real exchange rate. The procedure used was the method of Johansen co-integration which pointed to the existence of long-term relationships between price and income, whose changes over time became soybean exports to China relatively stable in the range studied. It was also found that short-term changes in the variables addressed lead to momentary imbalance between price and income; such discrepancies were corrected in subsequent periods. The elasticities obtained seem to indicate that the volume of soybean exports to China is significantly affected by the level of income in that country and to a lesser extent by the real exchange rate.