China's Agricultural Futures Market Development

Agriculture is an important industry for subsistence and multiplying of human beings. In the market economy, the supply/demand with price of agricultural products are subject to the influence of natural disasters and other factors, which result in great fluctuations. People have discovered and created effective mechanism of futures market for agricultural products to control the soaring and slumping of the prices for agricultural products through long term researching.The futures market for agricultural products is the earliest futures market in the world and belongs to the financial service sector in terms of the business category. The most influential futures market for agricultural products in the world is Chicago Board of Trade and its transaction volume and turnover has kept growing since more than 150 years ago after the establishment in 1848, which demonstrates from another aspect that more and more production, processing and circulation enterprises have huge and growing demand towards futures market. In one word, if the market economy and price fluctuation still exist and if people facing with the market risk and price fluctuation still exist, the futures market will be existence for ever and keep running energetically. The reform of the economic structures in China has been carried out for more than twenty years. During the process of transition towards market economy, we have got great achievements: rapidly growing economy, unprecedented prosperous market; the great progress in agricultural production, more and more agricultural and sideline products available. Meanwhile, we also came across the problem of soaring and slumping in prices of agricultural products that had occurred periodically in countries with market economy. Therefore, since the end of 1980's in last century, we have been paying attention to and studying the unique function of futures market in western developed countries and moved further to establish several futures markets for agricultural products in early 1990's. Ten years passed and three futures exchanges, 12 commodities futures and about 170 futures brokers have survived during the vicissitudes, rectification andstandardization of futures market in China. Futures market has embarked on the track of standardized development and played certain role in arranging production for related enterprises and controlling the risk. We have both experiences and lessons. Opportunities come together with various difficulties: we still lack of the basic understanding of the function of futures market for agricultural products. The development of futures market could not provoke enough attention from the government and wide involvement from enterprises. We are still weak in the research of futures market for agricultural product. Some erroneous concepts still prevail and exert real and detrimental influence towards the operation of futures market. Upon the admission of China into WTO and along with the rapid growth of integration, globalization and networking of world economy, domestic enterprises relating with agriculture have been exposed directly to international competition and price risk. However, the futures market for agricultural products in China has not been fully prepared. The major subject in this thesis is the aforesaid problems and the development of futures market for agricultural products in China. In this thesis, I have carried out systematic expounding and demonstration towards the development of futures market for agricultural products including the function and operation of futures market for agricultural product and the influence of entry into WTO and networking and have conducted quantitative research and mathematical analysis on some technical problems with quantitative economic approach to attempt to draw several conclusions of regularity, which may play certain role in the cultivation and development of futures market for agricultural products based on the research done by predecessors combining with my understanding during the study and the reference of...