The basic analysis method is to explain and predict the trend of futures prices according to the output, consumption and inventory (or the gap between supply and demand), that is, by analyzing the supply and demand of futures commodities and its influencing factors. Fundamental analysis mainly analyzes the long-term price trend of the futures market, which is the so-called general trend, and holds contracts for a long time on this basis, frequently changing the direction of positions, without paying much attention to the repeated fluctuations of daily prices. The famous saying of economics is: in the long run, the price of goods will eventually reflect the price of the balance point between supply and demand. Therefore, the supply and demand of commodities have an important impact on commodity futures prices. Basic factor analysis mainly analyzes the relationship between supply and demand. The change of commodity supply and demand and the change of price influence and restrict each other. Commodity prices are inversely proportional to supply, supply increases and prices fall; Supply decreases and prices rise. Commodity prices are directly proportional to demand, demand increases and prices rise; Demand decreases and prices fall. With other factors unchanged, any change in the relationship between supply and demand may affect the change of commodity prices. On the one hand, the change of commodity prices is influenced by the change of supply and demand; On the other hand, changes in commodity prices have an impact on supply and demand in turn: prices rise, supply increases, and demand decreases; As prices fall, supply decreases and demand increases. This interaction and causal relationship between supply and demand and price makes the analysis of commodity supply and demand more complicated, that is, not only the influence of supply and demand changes on prices, but also the reaction of price changes on supply and demand should be considered. In the real market, futures prices are not only affected by the relationship between supply and demand of commodities, but also by many other non-supply and demand factors. These non-supply and demand factors include: financial and monetary factors, political factors, policy factors, speculative factors, psychological expectations and so on. Therefore, the analysis of the basic factors of futures price trend needs to comprehensively consider the influence of these factors. (I) Analysis of the supply of futures commodities Supply refers to the quantity of a commodity or service that producers or sellers are willing and likely to provide at a certain time, place and price level. The main factors that determine the supply of a commodity are: the price of the commodity, the level of production technology, the price level of other commodities, production costs, market expectations, etc. The supply of commodity market mainly consists of three parts: initial inventory, current output and current import. 1. Initial inventory Initial inventory refers to the physical quantity of goods accumulated in the previous year or quarter for the society to continue to consume. According to the identity of the inventory owner, it can be divided into producer-supplier inventory, dealer inventory and government reserve. The first two kinds of stocks can be listed and supplied at any time according to price changes, which can be regarded as the actual components of market commodity supply. The purpose of government reserves is to reserve for the overall interests of the whole society, and it will not be easily put on the market because of general price changes. However, when the market supply is seriously insufficient and prices soar, the government may use it to stabilize prices, which will have an important impact on market supply. 2. Current output Current output refers to the commodity output of this year or this quarter. It is the main body of commodity supply in the market, and its influencing factors are also very complicated. In the short term, it is mainly restricted by production capacity, resources and natural conditions, production costs and government policies. The influencing factors of different commodity production may vary greatly, so it is necessary to analyze the influencing factors of specific commodity production in order to grasp its possible changes more accurately. 3. The current import volume is a supplement to domestic production, which usually changes with the balance of supply and demand in the domestic market. At the same time, the import volume will also be affected by international and domestic market spreads, exchange rates, national import and export policies and international political factors. (II) Analysis of the demand for futures commodities The demand in the commodity market refers to the quantity of a commodity that consumers are willing and able to buy at a certain time, place and price level. The main factors that determine the demand of a commodity are: commodity price, consumer's income, consumer's preference, the change of related commodity price, the influence of consumer's expectation and so on. The demand of commodity market usually consists of three parts: domestic consumption, export volume and final commodity balance. 1. Domestic consumption Domestic consumption is mainly affected by the income level or purchasing power of consumers, the number of consumers, the change of consumption structure, the discovery of new uses of goods, the price of substitutes and the convenience of obtaining them. These changes often have greater impact on the demand and price of futures commodities than on the spot market. 2. Although the import with stable export volume is large, it has little influence on the international market price, while the import with unstable volume has little influence on the international market price. The export volume is the quantity of goods produced and processed in China that are sold to foreign markets, and it is one of the important factors that affect the domestic total demand. To analyze its changes, we should comprehensively consider the changes of various factors affecting exports, such as the supply and demand situation in the international and domestic markets, the price comparison between domestic sales and export, the changes of domestic export policies and import policies of importing countries, and the changes of tariffs and exchange rates. For example, China is one of the corn exporting countries, and the corn export volume is an important factor affecting the corn futures price. 3. The commodity balance at the end of the period has dual functions. On the one hand, it is an integral part of commodity demand and a necessary condition for normal social reproduction; On the other hand, it plays a role in balancing short-term supply and demand to a certain extent. When the supply of goods in this period is in short supply, the ending balance will decrease; Otherwise it will increase. Therefore, by analyzing the actual changes of inventory at the end of the current period, we can see the supply and demand of commodities in this period and its influence on the supply and demand and price of commodities in the next period from the perspective of physical movement of commodities. (3) Economic fluctuation cycle Commodity market fluctuation is usually closely related to economic fluctuation cycle. Futures prices are no exception. As the futures market is an open market closely linked with the international market, the price fluctuation of the futures market is not only affected by the domestic economic fluctuation cycle, but also by the prosperity of the world economy. The economic cycle generally consists of four stages: recovery, prosperity, recession and depression. At the beginning of the recovery phase, it was the lowest point of the last cycle, and both output and price were at the lowest level. With the recovery of economy, the recovery of production and the growth of demand, prices have also begun to pick up gradually. The boom stage is the peak stage of the economic cycle. Because the continuous expansion of investment demand and consumer demand exceeds the growth of output, the stimulus price rises rapidly to a higher level. The recession stage appeared after the peak of the economic cycle, and the economy began to decline. Due to shrinking demand, supply greatly exceeded demand, and prices fell rapidly. Depression is the bottom of the economic cycle. Both supply and demand are at a low level, and prices have stopped falling and are at a low level. During the evolution of the whole economic cycle, the price fluctuation lags behind the economic fluctuation slightly. These are the general characteristics of the four stages of the economic cycle. For example, before the 1960s, the economic cycle in western countries was characterized by large fluctuations in output and prices in the same direction. In the early 1970s, western countries entered the so-called stagflation period. The economy has fallen sharply, but prices are still rising sharply, and economic stagnation and serious inflation coexist. However, since the 1980s and 1990s, the economic fluctuation has been greatly reduced, and the overall price level has only risen but not fallen. In recession and depression, it is only the rate of price increase rather than the absolute price level. Of course, this kind of only rising but not falling refers to the general price level rather than the prices of all specific commodities, which are still rising and falling. After entering the mid-1990s, some emerging market economies, such as South Korea and Southeast Asian countries, were hit by the financial crisis, which led to a sharp drop in the international market prices of some commodities. However, the global economy has not fallen into a full-scale crisis, and the economies of European and American countries have continued to improve. Therefore, careful observation and analysis of the stages and characteristics of the economic cycle is of great significance for correctly grasping the price trend of the futures market. The stage of economic cycle can be judged by some main economic indicators, such as GDP growth rate, unemployment rate, price index, exchange rate and so on. These are all things that futures traders should pay close attention to. (4) Financial and monetary factors Commodity futures trading is closely related to financial and monetary markets. The fluctuation of interest rate and exchange rate directly affects the price change of commodity futures. 1, interest rate interest rate adjustment is a macro-control means for the government to tighten or expand the economy. The change of interest rate has great influence on financial derivatives trading, but little influence on commodity futures. For example, since 1994, in order to curb inflation, the People's Bank of China has substantially raised interest rates and increased the subsidy rate for maintaining the value of medium and long-term deposits and government bonds, which has led to the soaring price of government bond futures. On May 1995, the State Council ordered the trading of treasury bonds futures to be suspended. 2. The exchange rate futures market is an open market, and futures prices are closely related to commodity prices in the international market. The comparison of commodity prices in the international market inevitably involves the exchange rate of national currencies-exchange rate, that is, the ratio of domestic currency to foreign currency. When the local currency depreciates, even if the price of foreign goods remains unchanged, the price of foreign goods expressed in local currency will rise, and vice versa. Therefore, the fluctuation of exchange rate will inevitably affect the corresponding futures price changes. According to estimates, the depreciation of the US dollar against the Japanese yen 10% will reduce the price of soybean imported by Tokyo Grain Exchange in Japan by about 10%. Similarly, if the RMB depreciates against the US dollar, the domestic soybean futures price will also rise. The monetary policies of major exporting countries, such as the sharp depreciation of the Brazilian real in 1998, have greatly enhanced the export competitiveness of Brazilian soybeans. Relatively speaking, the increase in soybean supply has had a negative impact on soybean prices in Chicago. (V) Political and policy factors Futures market prices are very sensitive to changes in the international and domestic political climate and related policies. Political factors mainly refer to the international and domestic political situation, the outbreak of international political events and the resulting changes in the pattern of international relations, the establishment of various international economic and trade organizations and the conclusion of relevant commodity agreements, and various policies and measures adopted by the government for economic intervention. These factors will cause fluctuations in the futures market price. Internationally, the futures price of a listed product is often influenced by its relevant national policies, including agricultural policy, trade policy, grain policy and reserve policy. , including the International Economic and Trade Organization and its agreements. When analyzing the influence of political factors on futures prices, it should be noted that different commodities are affected to different degrees. For example, when the international situation is tense, the impact on the price of strategic materials is greater than that on other commodities. (VI) Natural factors Natural conditions mainly include climatic conditions, geographical changes and natural disasters. The production and consumption of grain, metals, energy and other commodities listed on the futures exchange are closely related to natural conditions. Sometimes, changes in natural factors will have an impact on transportation and storage, thus indirectly affecting production and consumption. For example, when natural conditions are unfavorable, the output of crops will be affected, thus tightening supply and stimulating futures prices to rise; On the other hand, if the climate is suitable, it will increase crop output, increase market supply and push down futures prices. Therefore, futures trading must pay close attention to natural factors and improve the accuracy of futures price forecasting. (VII) Speculative psychological factors There are a large number of speculators in the futures market. The purpose of their participation in trading is to take advantage of the fluctuation of futures prices to make profits. When the price is bullish, speculators will buy contracts quickly in order to make profits when the price rises, and a large number of speculative purchases will promote the further rise of futures prices; On the other hand, when the price is bearish, speculators will quickly short, and when the price falls, they will make up their positions to make profits, and a large number of speculative selling will push the futures price down further. Related to speculative factors is psychological factors, that is, speculators' confidence in the market. When people are full of confidence in the market, even if there is no good news, prices may rise; On the contrary, when people increase their confidence in the market, even without negative factors, prices will fall.