Determinants of Agricultural Futures Price Volatility: Literature Review

In recent years, China's agricultural futures prices have experienced significant fluctuations, which have a profound impact on the agricultural and financial markets. While, the volatility of futures price, which becomes a key indicator for measuring market risk, has gradually caught scholars’ and stakeholders’ eyes. Differing from the rationality of investors and the sufficiency of arbitrage, the traditional and the behavioral finance have made fruitful and complementary works on this topic. By reviewing the relevant literature, this article aims to clarify the traditional and behavioral factors that affect the volatility of agricultural futures prices. In addition, this article find that with the development of financialization in commodity futures markets, the influence of irrational factors in the market has become increasingly important. Specifically, behavioral financial factors such as investor sentiments and irrational investor behaviors have become increasingly important in influencing agricultural futures prices. This may provide references and materials for relevant studies and help participants control risks accurately. In summary, under the background of commodity financialization, it is important to study the price fluctuations of agricultural product futures from the perspectives of traditional finance and behavioral finance.