A Feasibility Study On Listing Garlic Futures

It is the focus in government macroeconomic regulation and control to stabilize the price of agricultural products. In recent years, the price of some small varieties of agricultural products, especially that of garlic, has undergone frequent fluctuation, which has caused great damage to the interest of farmers, distributors, processing enterprises and consumers. China is the largest garlic producer and exporter in the world, with its production, export quantity and exports value of garlic ranking the top. Sharp fluctuation of garlic price is a serious obstacle to the expansion of overseas markets. The price discovery function of agricultural product futures market can guide garlic production and operation activities, and hedging function can reduce the production and operation risk caused by price fluctuation. Therefore, it has great practical significance to analyze the feasibility of garlic futures market.In this paper, the conditions required for the listing of garlic are categorized on the basis the domestic and foreign literature on futures market and garlic spot. An analysis is conducted on the conditions of Chinese agricultural products futures and garlic spot, and comparison is made with other agricultural products to explore the feasibility of garlic futures market.Firstly, in terms of Chinese agricultural futures market conditions, the futures market is at the stage of stable development and gradual improvement. Listing garlic futures can enrich the existing trading varieties, optimize the structure of the futures products and help the healthy development of China's agricultural futures market. This, in turn, can not only reduce production and sales risks through transparent price signal and hedging function of futures market, but also regulate and control speculation of garlic with the supervision system of futures market.Secondly, in terms of the spot conditions of garlic, China's garlic has high internal competiveness with production and export volume occupying the first place in the world, and its export price has a significant negative impact on China's export volume of garlic. Garlic price fluctuation is frequent and seasonal with typical nonsymmetrical and nonrepeatable cycle, and abnormal fluctuation appeared during 2009-2010. The greatest impact on the price fluctuation of garlic is money supply, which indicates strong financial attribute of garlic. Garlic has stable quality and is easy to be standardized, stored and transported.Finally, through comparison with other agricultural products, this paper comes to the conclusion that the feasibility of listing Chinese garlic futures ranked No.4 in 16 agricultural products varieties, indicating higher feasibility of listing garlic futures. Nevertheless, many obstacles still exist. For example, the legal system of China's futures market is not perfect, new varieties listing mechanism needs to be reformed, garlic production and operation is small-scaled and with low added value, and it lacks intermediary organizations and futures cooperatives. In order to solve the problems mentioned above, this paper puts forward some relevant policy suggestions in order to promote the listing of garlic futures.