Commodity is a material commodity that can enter the circulation field, but is not a retail link. It has commodity attributes and is used for industrial and agricultural production and consumption. In the financial investment market, bulk commodities refer to homogeneous and tradable commodities widely used as industrial basic raw materials, such as crude oil, non-ferrous metals, steel, agricultural products, iron ore and coal.
Commodities can be designed as futures, and options can be traded as financial instruments, which can better realize price discovery and avoid price risks. Because bulk commodities are mostly industrial bases and at the forefront, the changes of futures and spot prices reflecting their supply and demand will directly affect the whole economic system.
relevant information
1, the price fluctuates greatly. Only when commodity prices fluctuate greatly, traders who intend to avoid price risks need to use forward prices to determine prices first. For example, some commodities are subject to monopoly prices or planned prices, and the prices are basically unchanged. There is no need for commodity operators to use futures trading to avoid price risks or lock in costs.
Both supply and demand are great. The function of the futures market is based on the extensive participation of both the supply and demand sides of commodities. Only goods with large spot supply and demand can fully compete in a wide range and form authoritative prices.
3. Easy to classify and standardize. The quality standard of the delivered goods is stipulated in the futures contract in advance. Therefore, futures varieties must be commodities with stable quality, otherwise, it will be difficult to standardize.
4. It is convenient for storage and transportation. Commodity futures are generally long-term delivery commodities, which requires these commodities to be easy to store, not easy to deteriorate and convenient to transport, so as to ensure the smooth delivery of futures.