It is a legal agreement to buy or sell goods at a pre-stipulated price and time in the future. Futures, unlike forwards, are standardized and traded on exchanges. Cash and futures prices generally move in the same direction by taking an opposite position in the futures market (i.e. a farmer hoping to sell three months later, sells futures today and buys back the futures three months later); therefore, the profits (losses) of one market can offset the losses (gains) of the other market.
