Geopolitical risks and the spillover of food market risks: case analysis of the Chinese grain market.

Maintaining the stability of food prices is crucial for achieving sustainable development in grain markets, particularly in the context of evolving international conditions and geopolitical risks. This study employs the DCC-GARCH model to examine the dynamic relationship between international and domestic grain prices, focusing on the price stability of major staple crops: soybeans, wheat, and corn. By applying generalized forecast error variance decomposition, we quantify the risk spillover effects within grain markets and clarify the role of geopolitical uncertainties in shaping such spillovers. The results reveal a pronounced time-varying pattern in the transmission of international grain prices to domestic prices, with discernible differences across crop types. Within-market risk spillovers significantly outweigh cross-market spillovers, identifying the international grain market as the primary conduit for risk transmission. Geopolitical uncertainty exerts short-term negative shocks on grain market risk spillovers and on the net spillovers of both international and domestic soybeans. Simultaneously, an increase is observed in the net spillover levels of both domestic and international wheat markets. The magnitude of geopolitical risk impacts on grain markets varies across distinct periods, with the Russia-Ukraine conflict exerting a temporary negative influence. Taking the 2022 Russia-Ukraine conflict and the Sino-US trade friction as typical cases, it further verified that geopolitical risks pose a substantive threat to China's food import security through two channels: directly impacting import sources and indirectly increasing production costs. Amid international trade uncertainties and geopolitical pressures, adopting innovative measures to bolster food security and improve nutrition is essential for advancing Sustainable Development Goal 2 (Zero Hunger). These findings offer significant implications for enhancing the stability of supply chains and market prices for key grains, particularly for agricultural importing countries.