Study On China's Beef Market Prices Volatility And Its Influencing Factors

The beef cattle industry is one of important part of livestock industry in China,and beef is the important meat consumption for urban and rural residents.Since the new century,the beef cattle industry and the beef market were under enormous pressure.The effective supply of beef is very important,which has a direct bearing on the increasing income of farmers and herdsmen,the stable beef consumption of urban and rural residents,and the smooth development of economic and society in China.Going back to the history,it is obvious to find that the beef price had risen twice quickly since 2007,and now,it is still on the high level.There is no doubt that the year of 2007 was the turning point of beef market and beef price in China.This study calculates the volatility law and characteristic of the beef market prices.Besides,it analyzes the volatility and transmission characteristic of the major beef cattle industry chain markets' prices,and studies the regional market prices' volatility and its dynamic correlation.Moreover,this study explores the effect of substitute markets,factor markets,trading markets and the exogenous shocks on the beef market price,and clarifies their influencing mechanism.Furthermore,it forecasts the future tendency of the beef market prices,and simulates the impact of key factors on the beef market prices.In the end,some initial programs to keep China's beef cattle industry continuous stable and healthy development,and promote the balance of the beef market are designed.Based on this background,using the national average beef price,the prices of the major beef production regions and the major beef consumption regions,this study establishes the two regimes Markov Switching Autoregressive Model and Markov Switching Vector Autoregressive Model to analyze the regime switching effect and the two regime average duration as well.Meanwhile,using prices of major beef cattle industry chain,and the prices of the major beef production regions and the major beef consumption regions,it constructs the Markov Switching Vector Autoregressive Model and the Bayesian Dynamic Conditional Correlation GARCH Model to explore the characteristic and the source of beef market prices volatility from the industry chain and the major regions.Besides,on the basis of influencing factors analysis,it uses a Time-varying Parameter Vector Autoregressive Model to calculate the effect of the correlative markets and the economic policy uncertainty on the beef market price.Moreover,based on a beef market partial equilibrium model,it forecasts the future tendency of the beef market prices,and simulates the effect of the inflation,the RMB exchange rate volatility and the China-Australia FTA on the beef market prices.The results show that:(1)The beef market price has significant regime switching effect,and it changes from moderate regime to heavy regime frequently.The probability and duration of the beef market price in the moderate regime is bigger than that of the heavy regime.The history of beef market price can be divided into seven stages from the year of 2000.And the regime switching effect of the market price volatility comes from the supply and demand factor,institutional factor and stochastic factor.(2)It has obvious transmission effect in the market prices of major beef cattle industry chain,and the markets of feeder and slaughtering cattle play a leading role in this sector.It indicates that the feeder and slaughtering cattle markets are the industry chain sources of the beef market prices volatility.(3)The correlation between each regional beef market price is different and time-variant,and the market of Beijing-Tianjin and northwest of China are the regional source of the beef market prices volatility.Besides,the volatility of the major beef production regions and the major beef consumption regions market prices are asymmetrical,and the volatility's rate of decay is slow.With the increasing of the beef market prices' fluctuation range,the rate of decay is more and more slow.(4)The effect of the correlative markets,such as substitute goods,factor and trade markets,and the economic policy uncertainty on the beef market is obvious.The impact of the economic policy uncertainty is heavy,and it may be the main reasons of beef market price cyclical volatility.(5)The beef market price and beef cattle slaughtering price will have an increasing tendency in the future.By the year of 2020,those two prices will reach 66.37 CNY/kg and 28.19 CNY/kg respectively.The moderate increasing of inflation has a negative impact on the beef market prices,while the declining of inflation has the contrary impact.The continued appreciation of RMB is good for the increasing of the beef market prices,while the effect of the depreciation of RMB is opposite.The establishment of China-Australia FTA has a negative impact on the beef cattle industry and the beef market,while it is beneficial to the increasing of the beef market prices.Based on the above conclusion,some countermeasures and suggestions are put forward,such as building an early warning mechanism of the beef market,perfecting the monitoring and early warning system of the beef im7ort market;intensifying the circulation mechanism of the beef market,and grasping and controlling the major link of beef cattle industry chain;regulating and controlling the beef market in different regions,and focusing on the market tendency of the major beef production regions and the major beef consumption regions;emphasizing the correlative markets,and reducing the shocks of the controllable factors;increasing the supporting of beef cattle industry,and perfecting the social service system for beef cattle industry and beef market.