The reason why the delivery month after the expiration date of hedging is chosen is because the expected change of basis (that is, the difference between spot price and futures price) is calculated according to the short-term price trend forecast, and the timing of entering and leaving the futures market is planned and implemented accordingly.

Futures hedging refers to the trading activities in which the futures market is used as a place to transfer price risks, and futures contracts are used as temporary substitutes for buying and selling commodities in the spot market in the future to insure the prices of commodities to be bought in the future.

Example:

In July, the spot price of soybean was 20 10 yuan per ton. A farm is satisfied with the price, but soybeans will not be sold until September, so the farm is worried that the spot price may fall by then, thus reducing income. In order to avoid the risk of future price decline, the farm decided to trade soybean futures on Dalian Commodity Exchange. The transaction is as follows:

Spot market futures market

In July, the soybean price was 20 10 yuan/ton, and the transaction was 10 lot. September soybean contract is 2050 yuan/ton.

In September, we sold 100 tons of soybeans at the price of 1.98 yuan/ton and bought 10 lot. September soybean contract closed at 2020 yuan/ton.

The price difference is 30 yuan/ton, with a total loss of 3,000 yuan, a profit of 30 yuan/ton, and a total profit of 3,000 yuan. The hedging result is -3000+3000 = 0 yuan Note: 1 hand = 10 ton.