Current location - Trademark Inquiry Complete Network - Futures platform - Why is futures good for farmers?
Why is futures good for farmers?
Because futures have the function of avoiding risks, generally speaking, costs or profits can be locked in advance through hedging (equivalent to a kind of "insurance").

For example, the current price of a crop is 1 1,000 yuan/ton, and farmers are worried that the price of this crop will decrease when harvesting, so they can short futures. In the harvest season, if the price of this crop rises to 1500 yuan/ton, then farmers lose money on futures, but make money on the spot; Suppose crops fall to 500 yuan/ton, and farmers lose money on the spot, but make money on futures.

This kind of one gain and one loss, although there may be the risk of earning less, locks in the originally envisaged profit and avoids the risk of price fluctuation.