Regression-Based Forecasting of Extreme Weather Impact on Agricultural Market Volatility: Enhancing Financial Risk Management in Agriculture

Yiming Liu, D’Amore McKim School of Business, Northeastern University, Boston, 02215, United States, liu.yimin@northeastern.edu
Yuchu Liang, School of Management Science and Engineering, Tianjin University of Finance and Economics, Tianjin, 300222, China, lyc753369@outlook.com
Volume11 nos.1 September 2025 ISSN 2755-3272

Keywords

Artificial Intelligence, Extreme Weather, Agricultural Market Fluctuations, Financial Risk Management, Prediction, Climate Change

Abstract

This study reveals the dynamic relationship between extreme weather and agricultural market fluctuations by constructing an econometric model. It uses the Ordinary Least Squares (OLS) method to conduct linear and nonlinear dimensional analyses, and integrates artificial intelligence technologies to improve prediction accuracy. The study finds that linear models are suitable for describing the cumulative effects of conventional disasters, while nonlinear extensions can capture the abrupt change characteristics in extreme scenarios. Meanwhile, by combining data preprocessing and extreme event identification with artificial intelligence, it proposes an approach to provide quantifiable decision-making tools for agricultural financial risk management and establish a full-chain risk prevention and control system of "monitoring-prediction-hedging".