Study On The Fluctuation Of International Grain Pricesand Its Transmission Effect On China’s Grain Prices

Grain is a basic necessity for human life and production, the stability of grain prices is related to the economic lifelines and national security of a country. China is not only a major grain-producing country in the world, but also a major food consuming country. China’s grain imports also increased significantly in these years. And since 2000, the international grain prices fluctuated more intensely than before, from 2000 to 2008 the international grain prices had been soaring, in 2008 it reached its highest level and then quickly dropped, and again from 2011 to 2013, the grain prices rapidly rose and fell. While international grain prices soaring, the Chinese grain prices were also rising. The impact of international grain prices on china can not be ignored. Therefore, this paper first studied the basic features of the international grain prices fluctuations, grasped the time series characteristics of international grain prices volatility, explored the causes of international grain prices volatility, clarified the dynamic conductivity effects of international grain prices volatility, and proposed policies to stabilize grain prices. It is significant for stabilizing the domestic grain prices, safeguarding the interests of farmers, thereby improving people’s lives, protecting national security.Firstly, this paper collected the research results at home and abroad from four perspectives, including the time series characteristics of international grain prices volatility, the influencing factors of international grain prices, the pass-through effect of international grain prices volatility and the policy studies respond to the international grain prices volatility, which were summarized and commented then.Secondly, this paper adopted three econometrics models to analyze the characteristics of international food prices volatility.(1) The STS model is used to decompose the structure of international grain price index, included seasonal components, trend components, cyclical components and irregular components, and to forecast the future international grain prices, which shows that international grain prices will be intermittently high and oscillate. The results also show that the international grain price had obvious seasonal, cyclical, the impact of international oil price and US dollar real effective exchange rate were significant.(2) The SVAR model is used to analyze the causes of international grain prices volatility. First, the causes of international grain prices volatility is analyzed qualitatively from three aspects, i.e. the supply, the demand and the macroeconomic factors, and then some representative and quantifiable indicators are selected to decompose the causes of international grain prices volatility by making use of the SVAR model, impulse response function and variance decomposition method, which shows that the supply shocks and demand shocks are still fundamental and major factors influencing the international grain prices volatility, while the impact of various external shocks such as the U.S. dollar, energy prices only play roles in certain period, i.e. in the long-term their influence are relatively small.(3) The BEKK-MGARCH model is used to study the prices conduction characteristics between four main varieties grains(including soybean, maize, wheat and rice), their mutual relationships, as well as the mechanism of their relationships, the substitution effect on production processes or consumption processes, expected effect, price comparison effect, and so on.Thirdly, the dynamic conduction of international grain prices volatility on Chinese grain prices is analyzed from three aspects, i.e. the equilibrium relationship, causality, dynamic correlation, which shows that there was long-term equilibrium relationship between international and domestic grain price, the impact of international prices on domestic grain prices is also significantly asymmetry. The Granger causality test showed the presence of one-way Granger Causality from international grain prices to domestic grain prices. There is a static correlation as well as a significant dynamic correlation between the international grain market and the domestic food market. Overall, there is highly integrated relationship between international grain prices and domestic grain prices.Finally, based on international grain prices volatility characteristics and its conduction effects on China, this paper proposes some countermeasures to stabilize Chinese grain prices from four aspects, i.e. grain production, circulation, inventory, import and export.