1 storage and transportation costs. For example, if you are an egg trader, the eggs you bought today are not sold immediately, but you find a buyer three days later, then you need a warehouse to store eggs, artificial care, refrigeration fees and so on. During these three days, at the same time, if the delivery needs to be delivered to the designated warehouse on the due date, there will be transportation costs. This part of the cost should be added to the futures price.
2 opportunity cost. If you don't buy eggs at first, then this part of the funds can be used to invest in other targets, such as buying fixed-income products to obtain risk-free income. This is the opportunity cost of capital. This cost should also be added to the futures price.
3 facilitate income. In the commodity market, if you are an egg trader, if after buying these eggs, the price rises due to the shortage of eggs in the later period, the income from holding eggs is convenience income, which can be the cost reduction brought by buying fewer eggs than usual, or it can be more income because the eggs bought before can sell at a better price, or both. This part of the cost should be deducted from the futures price.
4 the relationship between supply and demand in the spot market. Simply put, the spot market is in short supply and the price is rising; The spot market is oversupplied and the price falls. The fluctuation of futures price is basically consistent with the spot price, and with the passage of time, it is increasingly consistent with the spot price when the contract expires.
5 economic cycle. The fluctuation of commodity market is usually closely related to the economic cycle. Futures prices are no exception. In the process of the free flow of capital and the integration of the world economy, the prosperity of foreign economies will also affect the fluctuation of futures market prices.
6 national policies. Monetary and fiscal policies, industrial policies, import and export policies, etc. Involving interest rate changes.
Of course, there are also seasonal factors, exchange rate fluctuations, emergencies (Brazil's Vale mine disaster led to a sharp rise in iron ore prices), speculative psychological factors, and even price manipulation caused by capital speculation.
While analyzing the influencing factors of futures prices, we should distinguish which ones are negative and which ones are positive. Combined with the judgment of the current market sentiment, we should do a good job in fund management and risk control, and let the price rise and fall become the driving force for us to keep moving forward in the financial market.