Pricing-to-Market Analysis: The Case of EU Wheat Exports

The EU is a major player in the global wheat market. This paper examines the pricing behavior of EU wheat exporters using a pricing-to-market (PTM) analysis. Wheat is an exemplary product for testing PTM theories as it is widely and frequently traded, and it is largely unbranded. We estimate the relationship between export unit values and exchange rates using quarterly panel data for 11 export destinations for 2000- 2013. Results show that there is a meaningful long-run relationship between export unit values and exchange rates, but there is little evidence of differential mark-ups between export markets. Belarus and Iceland are exceptions where the EU exercises local currency price stabilization.