The price fluctuation of general merchandise products is mainly affected by basic factors such as market supply and demand, which means any economic factors that reduce supply or increase consumption will lead to changes in prices. On the contrary, any factor that increases supply or decreases consumption of products will lead to an increase in inventories and a decrease in prices. However, with the development of the modern economy, some non-supply and demand factors have also played an increasingly important role in the changes in futures prices. Therefore, the investment market is more complex and unpredictable.
Commodity supply and demand conditions have an important impact on commodity futures prices. The basic factor analysis method mainly amylase the relationship between supply and demand. Changes in commodity supply and demand and changes in prices influence and restrict each other. Commodity prices are inversely proportional to supply, when supply increases, prices will decrease, when supply decreases, prices will increase. The price of household products is directly proportional to demand, when demand increases, prices will also increase, when demand decreases, prices will also decrease. If other factors are unchanged, any changes in supply and demand may affect changes in commodity prices. The close relationship between supply, demand and price makes the analysis of commodity supply and demand more complicated. Therefore, it is necessary to consider not only the influence of supply and demand changes on prices, but also consider the reaction of price changes on supply and demand.
Commodity market fluctuations are usually closely related to economic fluctuation cycles, futures prices are also included. Besides, the futures market is an open market closely linked to international markets. Therefore, the price fluctuations in the futures market are not only affected by the fluctuation cycle of the national economy, but also affected by the global economy.
Commodity futures trading is closely related to the financial and currency markets. The fluctuation of interest rate and exchange rate directly affect the future price of household products.
(1) Interest rate
For speculative futures traders, margin interest is the main cost of their transactions. Therefore, the fluctuation of interest rates will directly affect the transaction costs of futures traders. If interest rates increase, the transaction cost will increase, and speculators’ risks will also increase. In addition, it will reduce futures speculative trading and reduce trading volume. If interest rates decrease, futures speculation will also decrease, and trading volume will increase.
The interest rate adjustment is a macro-control method for countries to tighten or expand the economy. Changes in interest rates have a greater impact on financial derivatives transactions, but have a smaller impact on commodity futures.
(2) Exchange rate
The futures market is an open market, and futures prices are closely related to commodity prices in international markets. The price comparison of general merchandise products in international markets must involve the exchange rate of each country's currency. The exchange rate is a ratio between the domestic currency and the foreign currency. When the domestic currency depreciates, even if the price of foreign products remains unchanged, the price of foreign goods marked in domestic currency will rise, otherwise, it will decrease. Therefore, changes in the exchange rate will inevitably affect the corresponding changes in futures prices.
Futures market prices are very sensitive to changes in the international political environment and related policies. Political factors mainly refer to the international political situation, the outbreak of international political events and the resulting changes in the pattern of international relations, the establishment of various international economic and trade organizations and the conclusion of relevant commodity agreements, and the various national economic interventions, policies and measures, etc. These factors will cause fluctuations in the market prices of household products.