Research On The Functional Efficiency Of China's Corn Futures Market

Corn is widely cultivated around the world,and corn is also the most widely grown food crop in China.Since maize was introduced to China in the first half of the sixteenth century,it has become an important crop in China and has been planted in most parts of China.China can be said to be the only country in the world that can grow corn in the four seasons of spring,summer,autumn and winter.China's corn varieties are mainly spring corn and summer corn.Maize plays a decisive role in China's grain production.By 2017,the corn planting area will reach 532 million mu,accounting for 31.7% of the country's grain sown area;and the total corn production will reach 202 million tons,accounting for 32.7% of the country's total grain output.Maize has the characteristics of long industry chain,large demand elasticity,and high degree of correlation between domestic and foreign markets.The healthy development of the corn industry is related to the vital interests of thousands of grain farmers and concerns about national food security.It is of great significance to China.In September 2004,the corn futures contract was formally traded on the Dalian Commodity Exchange.This was the first food futures listed since the nationwide futures market was cleared in 1998.The listing and trading of corn futures contracts will further improve China's grain system,which means that the reform of the grain circulation system will be further deepened in the market.Since China's corn futures contract re-listed and traded in 2004,the development has been relatively smooth and there has been no significant price fluctuations.The price discovery and hedging functions of corn futures have also been utilized.Under the background of the new normal of China's economy,the new policy of the corn industry has been continuously introduced,and the price of corn will become more and more market-oriented.The corn futures market is closely related to the price of corn and will surely play a more important role in the continuous development of the corn industry.In order to serve the three rural areas,vigorously develop the agricultural economy,accelerate rural development,narrow the gap between urban and rural areas,the state attaches great importance to the development of agricultural product futures markets.The role of agricultural product futures market development in agricultural development is self-evident.First of all,agricultural product prices often appear as “roller coaster”-like large fluctuations.The agricultural futures market is conducive to shifting risks and squeezing price volatility.Second,at present,China is vigorously developing modern agriculture and large-scale agriculture,and some agricultural operating entities with a certain scale have The demand for price hedges,futures is a good tool for hedging.The futures market has the economic functions of price discovery and hedging.In a market in which hedgers and speculators participate together,risks are transferred,prices are discovered,and information efficiency is improved.However,the futures market with missing functions not only fails to play a role in application,but also tends to cause risk accumulation,severe price fluctuations,and serious consequences of market instability.It is for the above reasons that this paper takes corn futures as an example to study the efficiency of price discovery function and the efficiency of hedging function in the corn futures market.The full text is divided into five chapters:Chapter 1,Introduction.It introduces the background,research significance,research ideas and methods of the thesis,the paper's technology roadmap,and possible innovations and deficiencies of the paper.The second chapter summarizes the related concepts and literature of the futures market.It mainly introduces the two major functions of futures market definition,basis difference and futures market,price discovery function and hedging function,function efficiency of futures market,as well as theoretical research overview and empirical research overview of domestic and foreign futures market functions.The third chapter is the evaluation method of functional efficiency of corn futures market.This chapter describes the evaluation methods of these two major functional efficiencies.The evaluation method of price discovery efficiency adopts cointegration test,Granger causality test and vector error correction model.The hedging efficiency evaluation method adopts basis error analysis,hedge value performance value analysis,and optimal hedging ratio.Analysis and liquidity analysis.Chapter IV,empirical analysis of functional efficiency of corn futures market.Based on the functional efficiency evaluation method introduced in the previous chapter,this chapter analyzes the price discovery functional efficiency and hedging function efficiency of China's corn futures market.Chapter V,conclusion and policy recommendations.The conclusion of this paper is that China's corn futures market has price discovery efficiency.Cointegration tests,Granger causality tests all indicate that futures prices have a good guiding effect on spot prices.However,the error correction coefficient estimated by the vector error correction model indicates that it is very slow and takes a long time to return to the equilibrium state after the fluctuation of the corn futures price and the spot price.This means that the automatic adjustment mechanism for the corn futures market and the spot market is still not perfect,and the market is returning to an equilibrium state at a very slow pace.It is necessary to further strengthen the construction of the corn futures market and the spot market.China's corn futures market has a certain hedging efficiency.Through the analysis of basis difference,the analysis of hedging performance and the calculation of the optimal hedge ratio,it can be concluded that the corn futures market has better hedging efficiency.However,through the analysis of liquidity,it can be found that only three of the six contracts are more active and the other three are less active.At the same time,it can be seen in the analysis of basis differences that after 2016,with the gradual maturation of the corn market and high inventory levels,the corn temporary storage system was canceled,and the price was changed from the previous government control to completely determined by the market.The whole market fell to the ground and looked at the price of new corn.As a result,the pricing of corn futures contract fell sharply.The spot price rose sharply,which led to a shift in the fundamentals,a 180 degree shift in market structure,and a six-contract settlement period.Not significantly converged,hedging efficiency decreased compared with before.Then from strengthening the construction of the corn spot market system to further optimize the structure of the trader,policy suggestions for enhancing the functional efficiency of the corn futures market are proposed in two aspects.