Study on Price Bubbles of China’s Agricultural Commodity against the Background of Big Data

Abstract

Agriculture provides a basis for social and economic development. It is therefore crucial for society and the economy to stabilize agricultural prices. Recent large increases and decreases in Chinese agricultural commodity prices have increased production risks, heightened fluctuations in the domestic agricultural supply, and impacted the stability of the global agricultural market. Meanwhile, big data technology has advanced quickly and now serves as a foundation for the investigation of time series bubbles. Identifying agricultural price bubbles is important for determining agricultural production decisions and policies that control agricultural prices. Using weekly agricultural price data from 2009 to 2021, this paper identifies agricultural price bubbles, pinpoints their time points, and examines their causes. According to our research, prices for corn, hog, green onions, pork, and ginger all have bubbles, but garlic do not. The quantity, length, time distribution, and type of bubbles differ significantly among corn, ginger, green onion, hog, and pork. The main causes for ginger and green onion price bubbles are speculation and natural disasters. Price bubbles for hog and pork are influenced by animal disease and rising costs. Conflicts between supply and demand and changes in price policy cause corn price bubbles to form. This paper advises that the government adopt various regulatory actions to stabilize agricultural prices depending on the characteristics and causes of the various types of agricultural price bubbles, it should also improve the early warning system and response mechanism for agricultural price bubbles and focus on how policies and market processes work together.

Food Price Bubbles: Food Price Indices of Turkey, the FAO, the OECD, and the IMF

“…Four distinct bubble formations may be seen when the bubble formation times for the IMF variable are examined. Similar to [1,3,59,[61][62][63][64]66,68,[88][89][90][91] the results of the study suggest that there were many food price bubbles in the period under consideration. A small number of studies [16,18,60] in the literature failed to reach the bubble formations or concluded that very few bubbles formed.…”

“…The government should adopt various regulatory actions to stabilize agricultural prices depending on the characteristics and causes of the various types of agricultural price bubbles and focus on how policies and market processes work together in addressing the issue [1,62,100,101]. The following points summarize the suggestions in the literature to resolve food price bubbles in Turkey:…”

“…A "price bubble" is a phenomenon in which the value of a commodity or asset deviates from its market price [1]. The phenomenon frequently happens in various financial markets such as futures markets [2], and it usually occurs due to reasons other than supply and demand [3].…”

“…The initial upward price trend of a commodity or asset builds anticipation for future price increases and draws in new speculators, but the expectations of speculators change when prices hit a certain range. This change results in a sharp decrease in commodity or asset prices, and the price bubble bursts [1]. According to Alola (2022) [5], this type of bubble can create a cycle of swiftly growing and reducing expenses that can be hard to predict and manipulate.…”