Hello, futures is essentially a risk management tool. The unique hedging function is not available in other financial products. Hedging is to buy and sell the same commodity in the same quantity but in the opposite direction in both the spot market and the futures market, that is, to buy or sell the same quantity of futures in the futures market at the same time. After a period of time, when the price changes make the profit and loss in spot trading even, the losses in futures trading can be offset or compensated. Therefore, hedging mechanisms are established between "now" and "period" and between short-term and long-term to minimize price risk.

Hedging operations are mostly corporate customers, and entities often face the risk of losses caused by rising production costs or falling product prices.

The role of hedging in the production and operation of enterprises;

1, determine the procurement cost and ensure the profit of the enterprise. The supplier has signed a spot supply contract with the buyer for future delivery, but at this time, the supplier does not need to buy the materials required by the contract. In order to avoid the price increase when purchasing raw materials in the future, we can lock in profits by buying related raw materials in futures.

2, determine the sales price, to ensure corporate profits. Production enterprises have signed contracts to purchase raw materials, sell related finished products through futures and lock in production profits.

3, to ensure that the enterprise budget does not exceed the standard.

4. Upstream enterprises of raw materials in the industry guarantee production profits.

5, to ensure trade profits

6. Adjust the inventory

A, when it is considered that the current raw material price is reasonable and it is necessary to increase the inventory, futures can be used instead of spot inventory, and the utilization rate of enterprise funds can be improved through its leverage principle to ensure the cash flow of enterprises.

B, when the price of raw materials falls, and the enterprise's inventory cannot be reduced due to production or other factors, sell it in futures to avoid the losses caused by price depreciation to the enterprise.

7. Financing

When spot enterprises need financing, they can obtain a higher financing ratio from banks or related institutions by pledging futures warehouse receipts.

8. Avoid exchange rate losses of foreign trade enterprises.

When foreign trade enterprises settle accounts in foreign currency, they can lock in the exchange rate through futures to avoid the losses caused by exchange rate fluctuations and lock in the order profits.

9. Purchase or sales channels of enterprises. In some specific cases, the futures market can become another channel for enterprises to buy or sell. When the goods enter the delivery link, the real transfer of commodity property rights is realized, which is an appropriate supplement to spot purchase or sales.