The futures market is a market for buying and selling futures contracts. The broad futures market includes futures exchanges, clearing houses or settlement companies, futures brokerage companies and investors. The narrow sense of futures market only refers to futures exchanges. The futures exchange is the place to buy and sell futures contracts and the core of the futures market. In the futures market, those who participate in futures trading are producers and operators who transfer the risk of price fluctuation and venture capitalists who bear the price risk to obtain profits. They compete fairly in the futures exchange according to law and are guaranteed by the margin system. The purpose of futures trading is not to obtain physical objects, but to avoid risks or make profits from investment, and generally the transfer of commodity ownership is not realized.
The basic economic functions of the futures market are to transfer risks, hedge and find prices. Due to the changes of natural and human factors, commodity prices will fluctuate, which will often have an adverse impact on one of the buyers and sellers. For example, in the international market, changes such as drought, flood, war, political turmoil and storms directly affect commodity prices. Individuals or companies with a large number of related commodities will soon find that the value of their inventory has risen or fallen sharply almost overnight. Intense market competition will lead to large price fluctuations in a short period of time. The risk factors related to supply and demand also include the periodicity of demand for some commodities and the seasonality of agricultural products harvest. The potential price risk brought by the unpredictability of supply and demand is inherent in the market economy, and both buyers and sellers can't resist it. In order to transfer the price risk, traders can resell or supplement futures contracts at any time through the futures market, and transfer the price risk to a third party to achieve the purpose of maintaining the value. There are many people who participate in futures trading, and they all trade at the price they think is the most suitable. Therefore, futures prices can comprehensively reflect the expectations of both supply and demand for the relationship between supply and demand and price trends in a certain period of time in the future. This kind of price information increases the transparency of the market and helps to improve the efficiency of resource allocation. The price formed in the futures market has become the main reference for producers, operators and investors to make decisions. The prices of copper in Shanghai Futures Exchange and soybean in Dalian Commodity Exchange have become the industry guidance prices at home and abroad.
The basic function of commodity futures trading is to find prices and avoid price risks. Many people participate in futures trading at the price they think is the most suitable. Therefore, futures prices can comprehensively reflect the expectations and price trends of both the supply and demand sides in the future. This kind of price information increases the transparency of the market and helps to improve the efficiency of resource allocation. In the actual production and operation process, in order to avoid rising costs or falling profits caused by changing commodity prices, futures trading can be used for hedging, that is, buying or selling goods with the same quantity but opposite trading directions in the futures market, so that the gains and losses in the two markets can offset each other. Futures is also an investment tool. Because the futures contract price fluctuates, investors can use the price difference to earn risk profits.
The futures market guides production and trade by discovering prices. When farmers produce and sell, they are often confused about what to plant, how much to plant and how much to sell after planting. China's soybean futures market is relatively mature, and the soybean futures price information it provides can be used to guide production and sales. Spreading soybean futures information can increase farmers' income. Soybean futures market has promoted the development of contract agriculture. Many provinces and regions in China are developing contract agriculture and have achieved certain results. Through the soybean futures market, order enterprises can accurately judge the future price trend of agricultural products according to the price of the corresponding futures contract month, scientifically formulate the agreed purchase price of the order contract, avoid the market risk caused by large price fluctuation, provide guarantee for the performance of the order contract, and effectively promote the development of order agriculture.
All kinds of investors involved in futures trading include hedgers and speculators.
Hedgers are the main body engaged in commodity production, storage and transportation, processing and financial investment activities. They use the price discovery mechanism in the futures market to hedge the spot market transactions, but give up the purpose of making profits in the futures market.
Speculators are the main participants in earning the price difference. They buy low and sell high in the daytime trading in the futures market. They are lubricants and risk takers in the futures market, and the purpose of hedging cannot be achieved without the participation of speculators. In real market, speculators and hedgers are not inseparable.
When the price rises, people can transfer risks and speculate by buying and selling futures.
Under the national macro-control, the futures market has also had an impact on economic life. In the case of inflation, the state adopts tight monetary and fiscal policies, and prices rise, so the futures market can be used to transfer risks.
Therefore, the most important role of futures market in economic life is to avoid risks and hedge, and we should make better use of this feature of futures.