The price discovery in California almond market : new linkages to almond trading with China and India

To help farmers better understand market price impacts and international supply-demand situations and to improve their price forecast for the next growing season, this study utilizes monthly trade prices between 2015 and 2022 to China, India and the world marketplace (published by the United State of Department of Agriculture, Global Agricultural Trade System) to analyze the price linkage.This study applies both the vector auto-regression (VAR) model and the vector error-correction model to examine the correlation between local California wholesale prices and the export prices to China, India and the world market prices in the same time periods.The short-run VAR model results suggest that the local California wholesale price is a major price influencer that determines the following month's trade price. If a price shock happens in the local market, international prices with major trader players of China and India will adjust in the same direction and to a great magnitude. This study also concludes that China has a unidirectional negative impact on the local California wholesale price. In the longer term of more than one year, when the export price to China goes up, the local wholesale almond price will go down. This affirms the existence of a strong market linkage between China and California's almond wholesale market, and the speed of price convergence is relatively rapid.This study is an original work. It affirms the existence of a strong market linkage between China and California's almond wholesale market, and the speed of price convergence is relatively rapid.