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Why do enterprises use futures to hedge?
Futures hedging is a hedging method to prevent sharp price fluctuations from bringing huge losses to purchasing enterprises. For example, the price of a certain raw material may rise in the future. If you buy a second raw material at a certain stage in the future, you will have to bear higher costs. With futures, you can establish a forward contract with extremely low margin and lower price at present, and you can get the raw materials when the delivery time comes in the future. This can greatly reduce the input cost and increase the income of enterprises. On the contrary, the price will fall in the future, but the raw materials currently produced have to be bought to avoid the company being affected by the sharp decline after production. Create an empty order at the same time as buying, so that no matter how much it falls in the future, the impact will not be too great. The loss of purchase cost can be made up by establishing the surplus of short position.