A Study On Influence Factors Of International Grain Price Volatility

The United Nations Food and Agriculture Organization (FAO) annual grain price index shows that, the international grain price fluctuates more frequently and intensely in recent years. More frequent international grain price volatility affects significantly not only the global grain security but also the national economic security and social stability. Under this background, deeply discussing the factors behind the international grain price volatility is of significance to address global grain volatility and maintain global grain security by the cooperation of all countries in the world.This paper, from the aspect of grain’s traditional view of supply and demand and non-traditional view of supply and demand, analyzes the impact of relevant variables on international grain price volatility in1993to2005and2006to2012with the method of qualitative and quantitative analysis. This thesis focuses on whether the main factors that influence the international grain price volatility have changed.Except introduction, this dissertation has four parts. The second part statistically analyzes the status, feature, and trend of international grain price volatility in1993-2012.The third part is the theoretical analysis of the influence factors of international grain price volatility. This part qualitatively analyzes the specific contents of the influencing factors of international grain price volatility from the perspective of traditional supply and demand and non-traditional supply and demand by using the relevant economics principles. The fourth part is the empirical analysis of the influence factors of international grain price volatility, and quantitatively analyzes the influencing factors of international grain price volatility through choosing international grain demand, grain supply, the international oil price, effective exchange rate and the benchmark interest rate as the variables of SVAR model. The empirical analysis studies how each variable standard unit shocks has impact on the volatility of international grain price by using impulse response function, and analyzes the contribution of variables to impact on the international grain price volatility in1993-2005and2006-2012by the method of variance decomposition analysis. The fifth part is the conclusion and policy suggestions.The key point of this paper is that influencing factors from non-traditional view of supply and demand plays a more and more important role. This paper makes a comprehensive analysis on international grain price volatility influencing factors by model analysis. Impulse response function results show that the expected price of grain shock and grain demand shock will have a positive effect on the international grain price over the long term. Effective exchange rate shock and the benchmark interest rate shock will have a negative impact on the international grain price. As a result of the time lag effect transfer, oil price shock won’t have a positive effect on the international grain price until lag period9, and food supply shock won’t have a negative impact on the international grain price until lag period20. Variance decomposition results show that the contribution of grain demand structure shock and supply structure shock to the international grain price volatility has changed little in1993-2005and2006-2012. On the contrary, the contribution of dollar effect exchange rate structure shock, the benchmark interest rate structure shock and the oil price structure shock has increased significantly during the lag period in2006-2012. This means that the main influencing factors of the international grain price volatility have changed since2006. The changes from influencing factors of grain price under non-traditional view of supply and demand have more and more significant influence on the international grain price.