Investigating the Common Stochastic Trend of Corn and Soybean Meal Prices in Iran and Its Main Trading Partners

Dependence of life and its continuity on agricultural products for providing food and necessity to minimize price volatility and reassuring the price levels in the future have been almost always one of the essential objectives of agricultural product price policy. The aim of the present study was to investigate the common stochastic trend between selected agricultural product prices in Iran and its trading partners. For this purpose, monthly price data of corn and soybean meal for Iran and Iran's main trading partner countries over the period 2006-2016 were used. Gonzalo-Granger and Johansen methods were used to determine common stochastic trends. The results showed that there are two common stochastic trends for the price of corn and in this regard, Iran, Brazil, and Argentina could be decisive leaders. Also, there are three common stochastic trends for the price of soybean meal, but none of the countries will be the price policy leader. Accordingly, in order to avoid fluctuations in domestic prices, it is necessary that the conditions of global market were monitored continuously and also the sensitivity of domestic prices to international price fluctuations by adopting appropriate support measures, particularly in the area of trade policy was reduced.