<p>A <strong>Commodity Futures Contract</strong> is an agreement between two parties to buy or sell a specific quantity of a commodity at a predetermined price and date in the future.</p>

<h2>How It Works</h2>
<p>A futures contract has several key components:</p>
<ul>
  <li><strong>Commodity</strong>: The underlying asset, such as grains, metals, or energy.</li>
  <li><strong>Quantity</strong>: The amount of the commodity to be traded.</li>
  <li><strong>Price</strong>: The agreed-upon price per unit of the commodity.</li>
  <li><strong>Date</strong>: The specified date when the contract expires and the transaction is settled.</li>
</ul>
<p>Futures contracts are standardized and traded on exchanges. Buyers and sellers can close their positions before expiration to avoid physical delivery.</p>

<h2>Why It Matters</h2>
<p>Commodity futures contracts serve several practical purposes:</p>
<ul>
  <li><strong>Hedging</strong>: Producers and consumers use futures to lock in prices and protect against market volatility.</li>
  <li><strong>Speculation</strong>: Traders buy and sell futures contracts to profit from price movements.</li>
  <li><strong>Price Discovery</strong>: Futures markets help establish current and future prices for commodities.</li>
</ul>
<p>For instance, a farmer might sell corn futures to guarantee a minimum price, while a food processor might buy corn futures to cap their input costs. Both parties benefit from the price certainty provided by commodity futures contracts.</p>