Impact Of The Financialisation Of Agricultural Commodity On The Agricultural Futures Price

In recent years, Prices in the international agricultural market have fluctuated significantly. The cyclical fluctuations of the prices have been increasingly affected by the impact of the financial derivatives market. Foreign scholars named this phenomenon as "Fianacialisation of Agricultural Commodity", and pointed out that this phenomenon are strong associated with the specified changes of international agricultural futures market structure. Index traders in the international agricultural futures markets have became the main body of the long position traders, breaking the traditional futures market structure that contains only hedgers and speculators and affecting the basic function of futures market-risk aversion and price discovery.In this paper, take the index trading in the international wheat futures market as the research object, tried to answer the three following questions:First, are Index traders speculators? Second, why index traders’huge net long positions are not regulated by the U.S. strict laws? Third, Does Index traders’trading behavior has influence on wheat futures price? If does, then to what extent?Around these three questions, this paper conducted study processes as follows:First, Index traders were classified according to their Index investment tools, then the paper conducted the analysis of the3different Index trades’transaction motivation and trading strategies, trying to find out the differences between traditional futures market participants and Index traders. Second, the study of the U.S. futures market regulatory system. This part formed the understanding of the U.S. futures market regulatory system’s administrative privileges, regulations and legal basis related to Index traders. Third, this paper used logical and empirical analysis to test the Index traders’ influence on wheat futures price, and the extent.The main conclusions of this paper include:First, index traders’trading motives and transaction behaviors does not belong to the speculation, decisions about open the unwinding didn’t base on the judgment of the future price movements, but followed the roll process of the commodity index operation. Second, the U.S. Commodity Futures Trading Commission has gave index Traders exemptions, which contributes to the huge net long positions. Third, Index Traders’ trading did push Chicago wheat futures prices higher to the systematic deviation.Finally, taking the development status of Chinese agricultural Future market and the index investment into consideration, this paper made three policy suggestions:Draft futures market legislation; Consolidate the regulatory system and build information network; Improve the structure of futures market and stimulate futures market trading.