What are the functions of agricultural futures trading?
Agricultural futures trading has two main functions, namely, price discovery function and risk management function.
Agricultural futures trading can reduce or avoid the high cost of China due to the lack of futures market in developed countries; Because the price information in the spot market of agricultural products is short-term and only reflects the supply and demand situation at a certain point in time, China agricultural products futures market can reduce the lag caused by this feature; Futures prices have played the role of benchmark prices, and the domestic agricultural futures market has become the domestic pricing center.
The government work report clearly requires the steady development of the stock market, the accelerated development of the bond market, and the active and steady development of the futures market. To develop modern agriculture and improve the rural market system, we must build agricultural products circulation facilities, develop new circulation methods, further standardize and improve the agricultural products futures market, and give full play to the role of guiding production, stabilizing the market and avoiding risks. The futures market has become an effective tool for enterprises to improve their operations, preserve their value and avoid risks. For many spot enterprises, the main function of futures market is hedging.
The futures market has become the reference of national macro-control, which has enhanced the effect of macro-control. The price information of the futures market reflects the market expectation and can provide scientific reference signals for the national macro-control.
At the same time, the efficiency of price information transmission in the futures market is very high, which has a great influence on the spot market. The transmission of national macro-control information through futures price information can reduce the time lag of information transmission, improve the efficiency of policy implementation and enhance the control effect.