The opening of Chinese grain market and international grain price fluctuations: an analysis based on the overflow effect of grain price fluctuations

【Abstract】This article uses the co-integration test and vector auto-regression (VAR) model to analyze the relations between Chinese grain prices and international grain prices. With the Baba-Engle-Kraft-Kroner (BEKK) model, it analyzes the overflow effect of international grain price fluctuations on Chinese grain price fluctuations. The study shows that there is no obvious co-integration relation between Chinese grain prices and international grain prices. Nevertheless, when the grain market is becoming more open, the co-integration level between Chinese grain prices and international grain prices is increasing. International grain price fluctuations have big impacts on Chinese grain price fluctuations, but the impacts are different among different varieties of grain. International grain price fluctuations have significant overflow effects on Chinese grain price fluctuations, and the overflow effects are strengthened by the opening of China’s grain market.

【Keywords】 grain; domestic market; international market; price fluctuation; overflow effect;

【DOI】

【Funds】 Project of National Natural Science Foundation of China (71373116) Project of National Natural Science Foundation of China (71203087) Special Fund for Non-profit Scientific Study on Grain (201313009-1, 201513004) Project of Advantaged Discipline Construction of Universities and Colleges in Jiangsu Province Project of Collaborative Innovation Center for Modern Grain Circulation and Security Project of “Blue Project” in Jiangsu Province Project of Outstanding Young and Middle-age Teacher and Study Overseas of principals of Universities and Colleges in Jiangsu Province

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    Footnote

    [1]. ①Source: Department of Rural Social and Economic Investigation of National Bureau of Statistics. (ed.) China Rural Statistical Yearbook (2001–2014) (中国农村统计年鉴). China Statistics Press. [^Back]

    [2]. ① Engle and Kroner(1995). [^Back]

    [3]. ②First, we estimate VECM or VAR model and gain data including residual term, variance and co-variance. Then, we estimate BEKK model based on the data of residual term, variance and co-variance, in order to receive the results of the overflow effect. [^Back]

    [4]. ①“Grain” primarily refers to cereal, including rice, wheat and corn in the world. In China, “grain” refers to cereal, beans and potato. Among them, the four primary crops are rice, wheat, corn and soybean. [^Back]

    [5]. ② This article chooses the data of international grain prices based on the availability of data and the international grain trade pattern. Considering the fact that South American countries are important exporters in international grain trade and are gradually becoming primary source countries of China’s grain import, this article chooses Argentina’s corn price as the international corn price. [^Back]

    [6]. ③ Chinese soybean and American No. 1 soybean are different in terms of varieties, which may be a limit of this article. [^Back]

    [7]. ④Bric Agricultural Database: http://www.chinabric.com. [^Back]

    [8]. ⑤ China JCI: http://www.chinajci.com. [^Back]

    [9]. ① China Grains Network: http://www.cngrain.com. [^Back]

    [10]. ① The differences of logarithms of Grain prices are approximately equal to change rates of grain prices. [^Back]

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This Article

ISSN:1007-0974

CN: 11-3799/F

Vol , No. 01, Pages 34-57+5

January 2019

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Article Outline

Abstract

  • 1 Introduction
  • 2 Literature review
  • 3 Research method and data
  • 4 Results and discussions
  • 5 Conclusion
  • Footnote

    References