An economic analysis of Montana wheat exports in the Asian market

Abstract

This study is a review of the export market for Montana wheat. It develops a procedure for determining the amounts of wheat by class that have been entering the export market, and then reviews the world export market for wheat and specifically examines Japan's market position. A market share analysis is used to look at the reasons behind the United States' changing shares of the world, Asian, and Japanese markets. This analysis defines three effects (size of market, competitive and distribution) and breaks out portions of market share changes attributable to each. Analyses included in this study showed changes in size of the markets to be the dominating effect regarding United States market share changes. An elasticity of substitution approach was used to further analyze the Japanese wheat import market. Values of elasticities of substitution which showed price ratios of competing wheat imports to be rather important in determining the quantity ratios were found. Price elasticities of demand were derived from the elasticity of substitution values. Resultant values provided a value of -4.159 as the elasticity of Japanese demand for United States hard wheats, -3.439 as the elasticity of Japanese demand for all United States wheat, and -1.466 as the elasticity of Japanese demand for United States hard and semi-hard wheats.