With the financial crisis sweeping the world, the commodity futures market is jittery. The focus of this paper is to explore the specific impact of the financial crisis on the commodity futures market and the coping strategies that different commodities should adopt.
First, the impact of the financial crisis on the commodity futures market.
The financial crisis is gradually spreading from the United States to the whole world. Major economies, including continental Europe, Asia-Pacific region, South America and even Oceania, have been affected to varying degrees, and its impact on the commodity futures market is unprecedented. Although there are many kinds of commodities, the impact of the financial crisis on them also shows some commonalities.
First of all, in the short term when the financial crisis broke out, due to the tight liquidity and unprecedented tension in the credit market, all investment markets were under pressure to sell assets, and the direct reflection of the commodity futures market was the collective plunge. Because the subprime mortgage crisis led to the decline of the credibility of financial institutions, which led to the overall contraction of the credit market and directly led institutions to reduce their positions in the commodity market in order to obtain higher liquidity. The loss of funds is the chief culprit of the market crash.
Secondly, with the spread of panic, the original financial system was systematically questioned, which made most markets overreact and further amplified the risks. Many varieties continue to fall, and market confidence is nowhere to be found. Credit is the cornerstone of the modern financial system, but this crisis has seriously threatened the foundation on which the financial system depends. The stormy Wall Street detonated one blockbuster after another, and at the same time touched the fragile nerves of the financial market. However, confidence is vulnerable and difficult to recover. It is by no means a day's work, and the market is still weak and difficult to shake.
Thirdly, the real economy will eventually be implicated, and the bursting of the asset price bubble will hit the consumption of bulk commodities to varying degrees. The recovery of economic growth and the establishment of market confidence will be a slow and tortuous process. Nowadays, finance and industry are inseparable. The credit crunch will directly affect the production of enterprises, and insufficient liquidity will reduce commodity consumption. Once a vicious circle is formed between credit, production and consumption, it will lead to economic recession. In fact, for some time, China's manufacturing enterprises have been facing the dilemma of being caught between Scylla and Charybdis, and have clearly issued the risk warning signal of economic slowdown. Although the financial crisis has not yet evolved into a real economic crisis, its impact on the real economy cannot be underestimated, especially since it originated in the real estate market, and the recovery of related commodity markets will be damaged.
Second, the different reactions of commodity futures under the financial crisis.
However, under this general decline pattern, various commodities are affected differently due to their own characteristics and the relationship between supply and demand. The varieties with strong openness have been implicated and hit hard, while the relatively closed varieties in China still have their own independence.
Due to the obvious slowdown of the global economy, the consumption of bulk industrial products has been hit hard, especially the prices of energy and chemical products have suffered heavy losses in this round of plunge, and the market outlook is still not optimistic. The sharp drop in commodities is basically caused by the sharp drop in crude oil prices, which have fallen by nearly 50% so far. It is predicted that before the economic stability of developed countries and the future growth model of China become clear, it will be difficult to find the bottom of crude oil and oil futures, and the related energy and chemical products will be weak and difficult to change.
The financial crisis has led to a sharp drop in the price of non-ferrous metals, and the impact path is nothing more than two. First of all, the American subprime mortgage crisis, which began in 2007, has gradually evolved into a global financial crisis, and the market panic is pervasive. As a part of the financial market, the impact on the metal market is inevitable, and systemic risks have seriously hit investor confidence and directly led to the decline of metal prices. Secondly, from a longer-term and deeper perspective, the financial crisis will affect the real economy, which will lead to a decline in global demand for industrial products, which is why industrial products have fallen more than agricultural products in this wave of decline. The willingness to withdraw funds from the metal futures market is relatively firm. In this case, the supply and demand fundamentals of metals temporarily fail, and the financial attributes of metals are more vividly displayed. In the current economic cycle, the bursting of the asset price bubble is inevitable. In the medium term, copper prices, aluminum prices and zinc prices still have room for further decline, but different varieties have different room for decline.
As far as agricultural products are concerned, the demand elasticity is low because most of them are necessities of life. The financial crisis has a great influence on the capital level, but has little influence on the value of the goods themselves, which ultimately comes down to the relationship between supply and demand. Among them, the price of strong wheat futures depends not only on the policy-led spot price trend of wheat, but also on the influence of changes in the international financial commodity market as a market-oriented futures variety. Of course, fundamentally speaking, spot price is the basis of futures pricing. Compared with the price gap of about 100- 150 yuan/ton between hard wheat and strong wheat in the spot market, the futures price has basically been revised after the market has fallen sharply since September. It is expected that the futures price of strong wheat will seek the "balance point" with the spot wheat price under the dual influence of policy and external market, and then enter the synchronous track of steady and rising spot wheat.
In terms of soybeans, the decline in crude oil prices has reduced the demand for soybean oil as a biofuel, but the edible demand of soybeans will not be greatly reduced because of the economic crisis. So when soybeans fall to a certain extent, the market will return to the supply and demand fundamentals of soybeans.
In the process of most commodities falling sharply because of the financial crisis, the trend of gold is unique, which is mainly determined by its special financial attributes. Recently, the trend of the gold market is unpredictable, the fluctuation range is enlarged, and the long-short switch is frequent, which is different from the previous monkey nature. Investigate its reason, we think it mainly comes from the joint action of the following aspects. First of all, gold is the only investment product without credit risk, so there seems to be no choice but gold to avoid the risk of credit system. But at the same time, we also see that the most prominent problem in the global financial market at present is that the liquidity crunch has not been alleviated, and the three-month borrowing cost of the euro is still near the historical high point, which makes the major investment markets lack the promotion of funds, and the gold futures market is no exception. At present, the long position of gold futures funds has been continuously declining, and the net long position level has not recovered to the high level after 2007 10, which shows that the fund's willingness to do more in the gold market is still not strong. Therefore, although the price of gold has risen several times, the effect is limited. Even in the process of the global stock market plunging at an alarming rate, gold failed to hold the level of 900 dollars.
In addition, due to panic selling in the global market, investors sell assets across the board to meet liquidity demand, and gold naturally bears the brunt. In addition, the appreciation of the dollar against the euro makes gold denominated in dollars more expensive than investors in other countries. Rising risk aversion has also accelerated the sell-off in the gold market. The impact of the financial crisis on gold is varied, and the specific market trend depends on the dominant factors at that time. In the long run, the additional issuance of US dollars brought by the rescue measures will inevitably sow the seeds of inflation and trigger a new round of commodity prices in the future, so the price of gold will regain support.
Third, the market prospects and coping strategies
Generally speaking, the author believes that the financial crisis will promote the bubble cleaning of commodity prices and accelerate the bottoming out of commodity prices. In the long run, because governments, especially the Federal Reserve, abuse credit at all costs in the crisis control stage, it will bury the curse of inflation in the future, and the next commodity bull market will still be detonated by inflation. In the continuous stage of financial turmoil, investors are advised to follow the trend, control their positions and wait for the arrival of the bottom of the whole commodity market. We expect this process to last for a year or so, or even longer.
At the same time, we also see that despite the spread of the international financial crisis and the turmoil in the global financial market, the fundamentals of China's rapid economic growth, good efficiency and stable operation have not changed, and the domestic economic situation has remained healthy on the whole, with limited impact from the international financial crisis. Moreover, the operation of domestic agricultural futures is relatively closed except soybeans. Therefore, for some varieties limited by the trend of international price changes, it is necessary to consider the influence of domestic policies and domestic demand. It is believed that under the guidance of the relevant national policies for supporting agriculture and macro-control, China's related futures varieties will bottom out at the end of this year and next year.