Chinese agricultural futures markets drive efficient price discovery for commodities.
The study looked at how Chinese agricultural futures markets determine prices over time. They found that most futures contracts are efficient in price discovery, especially when there are market-oriented policy changes. However, commodities heavily reliant on imports may not benefit as much. Trading activity plays a big role in determining if less popular contracts are good at price discovery. Overall, the research suggests that market reforms in spot markets could help strengthen the pricing power of futures markets in China.