An Empirical Analysis Of Henan Wheat Industry-based On The Guide Of Function Of Futures Market

Price discovery and risk transferring is two of the basic functions for the futures market.In foreign agricultural futures market, especially in the U.S. Futures market, the price of thefutures market has become the basis of pricing of agricultural products trading, acquisition,processing, and even in spot trading, contract prices are based on futures prices plus basis todetermine. The main planting crops in Henan is wheat, the wheat industry has anirreplaceable role in the economic development in Henan. The development of Henan’s wheatindustry is also constrained by many factors, such as: wheat varieties are not fully in line withmarket requirements, the high cost of production, wheat industry on the use of the futuresmarket is not fully, the lack of depth of processing. In this paper, combining with thefunctions of futures market and the development of industry, the studies mainly on how totake advantage of the agricultural futures market to achieve the rapid development of wheatindustry in Henan.Conclusions can be drew through the empirical analysis of multiple indicators: has apositive correlation between wheat futures prices and spot prices in Zhengzhou CommodityExchange, in long-term, futures prices and spot prices remain a long-term equilibriumrelationship, and the impact of futures prices is faster than spot prices; From the predictive ofempirical analysis on wheat futures prices, the futures price has a strong predictive ability onthe spot price, and the predictive ability of the futures prices on the spot price weakened Withthe lengthening of the maturity. From the empirical analysis of the risk transfer function ofthe wheat futures, the MV hedge ratio estimated by the OLS model and the ECM model were0.009973and0.017501, compared with the U.S. futures market, the hedging function ofwheat futures market in China does not fully play out, but already has the conditions to play arole. Conclusions can be drew from the empirical research that, Henan quality wheat acreagewill increase with increasing wheat futures turnover; the relationship between household percapita net income of rural residents in Henan and the national wheat futures turnover is0.561458. Therefore, in order to improve the degree of utilization of the wheat industry on the futures market, It is right time that a series of steps such as improving the agriculturalfutures market, promoting the channels of information dissemination, strengthening theassociation between the futures and spot markets, strengthening the government’smacro-control, promoting intermediary organizations.