Arec Essay Examples

Question 2: What is the structure of the international wheat market? Who are the major “players”?

Wheat production in the world on an annualized basis is 680 million tonnes. Five major exporters that are the US, Canada, Argentina, Australia and the European Union control world wheat market. Total production in these countries wheat is about 200 million tons per year. For export is directed approximately 80 million tons of grain and the main exporters is the United States, whose share of world grain trade is about 26%. The United States exports half of the wheat grown in the country and somewhat different situation in the EU, where almost all volume of grain grown leaves on domestic consumption.
The main importers of wheat for many years now serve Egypt, Brazil, Japan and the EU, to buy wheat, totaling about 110 million tons. In the period from 2006 to 2008, global wheat prices have risen sharply. One reason for the drastic rise in prices was the depletion of stocks of wheat. Along with the change in the structure of world markets and rising grain, prices have questions concerning the classification of world markets, which will help provide possible scenarios of behavior of exporters and their possible impact on pricing, including the markets grain crops.
Three types of markets in the degree of concentration characterize the market share of the largest seller in the total industry sales (market): 1) if the share of the largest seller of the market up to 15 %, such a market is characterized as a low concentrated. In this market, none of the market participants cannot influence the price level; 2) if the market share of the largest seller is 15 to 25%, then this market is characterized as moderately concentrated. In the market competing with each other, a few competitors cannot significantly affect the level of prices; 3) if the market share of the largest seller of over 25%, such a market is characterized as highly concentrated. In this case, the market is the seller who is in a position to influence significantly the pricing in the market to dictate and set prices in the markets.
Taking into account the classification of markets, world grain markets can be attributed to mild and highly concentrated markets. However, only at the end of 2011/12 world wheat market today refers to moderately concentrated markets. The market share of the US as the largest exporter in 2011/12 was 18.2%. However, until 2011/12 wheat market belonged to highly concentrated markets. By the end of 1990/91, 2000/01 and 2010/11 the market share of the US in the global wheat market was respectively 28.0%, 28.5% and 26.4%. Global trade in maize and wheat markets is highly concentrated markets. Therefore, at the end of 1990/91, 2000/01 and 2010/11 the market share of the US in the global market of maize were respectively 75.1%, 64.2%, and 50.9%. In contrast to the global markets wheat and corn grain, where the largest exporter remains the US, the world market of barley based on 1990/91, 2000/01, 2010/11 and 2011/12 there was a change leader. Prior to 2011 / 12 mg remained the largest exporter of the European Union, the market shares of which were respectively 42.9%, 42.9%, and 30.7%. However, in 2011/12 the largest exporter of barley place occupied Australia, the market share of which amounted to 26.3%. The high degree of market concentration in the hands of one person can cause price discrimination in the export market, subject to the exporter of the optimal solution, which is based on the maximization of profits.
Not all the wheat is considered to be the same regardless of source; there ar two different kinds of wheat in international market and research shows that wheat is differentiated by country and region. For last 25 yeas wheat marketing has largely developed at international level to a complex structure, in which wheat was largely considered to be homogenous product to a market based on pricing value of the product taking into the account quality of wheat. Research reveals that considerable pricing difference exist for wheat from various origins and contries around the world.

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