Study On The Co-relationship And Transmission Mechanism Between Domestic And Global Grain Prices Volatility

Grain prices is the benchmark of grain market. It has great influence on the grain security, resident life and social stability. So it always attracts the attention of all people. Since entering into the new century, the international grain prices keeps on running at high level and have huge volatility. At the same time, domestic grain prices is integrated into the international market gradually. The food import increases year by year. In current situation, in order to respond to the international grain prices volatility and stabilize the domestic grain prices, it is significant to research the correlation of domestic and international grain prices and explore its transmission channel. Trying to give some advice for stabling the domestic grain prices, That is the subject of this essay.The article includes four parts, except the introduction. Part II, the question is proposed. The similarity of grain prices volatility between domestic and international market is illustrated. The related data shows in2002—2012the grain prices between domestic and international market increased synchronously; the volatility also shows high consistency. Soybeans, corn, wheat, rice show great similarity in the price volatility.Part Ⅲ, using the sample of monthly prices in2002—2012, the relevance of grain prices volatility between domestic and international market were researched. The research shows that the grain prices between domestic and international market has long-term equilibrium relationship. the international grain prices have effect on the domestic prices.Part Ⅳ, this part conforms the inner mechanism of grain prices volatility between domestic and international market and finds the transmission way of grain prices volatility. This article firstly supposes that import and export trade mechanism, exchange rate mechanism, futures market propagation mechanism and substitution effect are the transmission mechanism of grain prices volatility. After test and discussion, the results show that the international grain prices affect domestic grain prices mainly through the way of trade transmission and substitution effect. Futures price shows no obvious effect on the domestic grain prices.Part Ⅴ, the conclusions and recommendation are summarized. The article conclude that, under the background of globalization, in order to stabilize the commodity price and ensure grain safety, the affect of international grain prices volatility should be controlled. In detail, we should increase the domestic grain supply, improve the grain reserving and supporting system, strengthen the supervision of grain prices, build up a sound warning mechanism and protection system, improve the futures market of grain prices.