2. Hedging is aimed at commodity traders: that is, reverse operation in the futures and spot markets, so that losses will be incurred in one market, but profits will be made in the other market, thus playing a role in maintaining value. For example, a soybean processor is going to buy 10 ton of soybeans within three months, and the current soybean price is 2000 yuan/ton. He is afraid that the price of soybean will rise in three months, and it will cost more, which is not conducive to production. In order to avoid or reduce this risk, he will buy a 10 ton soybean futures contract in the futures market three months later. In this case, he accompanied the money in the spot market, but he made money in the futures market. After breakeven, the price equivalent to buying soybeans is about 2000 yuan, and the cost has not changed much, which has played a role in maintaining value and stabilizing production.
As long as you hold the contract until the delivery date. If hedging is not done, spot (physical) exchange must be carried out according to the standards in the contract. In futures trading, the proportion of final delivery is very small.