Basically FuturesUnderstand it
A grain producer can use futures to reduce the uncertainty of future selling prices. A food processor might want protection against higher input costs. A speculator can take the other side for potential profit. Not every futures trader needs delivery: most active traders offset positions before expiration. The economic purpose matters because a futures contract is a risk-transfer mechanism before it is a chart on a screen.
Imagine a farmer who expects a crop in three months. A price decline could hurt the farm even if production stays strong. A short futures position can offset some of that risk, although the hedge can introduce basis risk and cash-flow demands.
Watch for this misconception
Calling every seller bearish. A hedger may sell because the business already owns or expects to produce the underlying commodity.
Describe one commercial hedger and one speculator on opposite sides of the same contract.
Position-size calculator ↗Why might a producer sell futures even if they believe prices could rise?
Check the sources
Hypothetical educational examples. Verify current product specifications and rules before making decisions.