Research On Price Fluctuation And Stability Of Chinese Primary Agricultural Products

This paper investigate the factors of prices fluctuation and the strategy of prices stability inChinese primary agricultural products based on financial perspective. Prices fluctuation of primaryagricultural products is directly related to the people’s immediate interests and the country’sstability. Primary agricultural products in China is no longer due to the imbalance of supply anddemand in recent years, therefore it deserves much attention. First, the paper generalize the existingtheory on prices of agricultural products, such as Cobweb theory, Futures theory, agriculturalprotection theory and so on, analysis the forming mechanism of agricultural product prices on thebasis of summarize and reference the results of previous research, which can lay the theoreticalfoundation for below. Second, combine with the current situation and characteristic of Chineseagricultural product prices, use historical data to analysis the key financial factors affecting theagricultural product prices in China. Third, according to the SVAR model，estimate of the degreethat financial factors impact on the prices of Chinese primary agricultural products quantitatively.Finally, provide some feasible way to resolve the prices’ abnormal fluctuation of primaryagricultural and stable the prices of agricultural products in China with the empirical results.The conclusion for this article as below:1. The forming mechanism of Agricultural product prices has been shifting from traditionalsupply-demand balances to the futures market-oriented mechanism based on the equilibrium ofsupply and demand. Therefore, factors that affect the price fluctuation of agricultural products arenot only the fundamental supply and demand, but also more non-traditional factors, such as thefinancial (capital) factor.2. Financial factors, effects of price fluctuations of primary agricultural products in China,mainly include exchange rates, level of domestic liquidity (money supply, inflation rate),international prices of oil and agricultural products, level of the global liquidity. The degree thatdifferent factors affect primary agricultural product prices is different.3. The international factors become more and more prominent. To be available for the pricingpower in the international agricultural products market, we must improve the agricultural productsfutures market and construct other new financial organization to compete with the internationalmarket.