many buyers use futures contracts to agree to purchase a commodity at a specific time in the future. what is one benefit of looking at the prices of such futures contracts to businesses that produce these commodities?

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15-11-2022
Business

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many buyers use futures contracts to agree to purchase a commodity at a specific time in the future. what is one benefit of looking at the prices of such futures contracts to businesses that produce these commodities?

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angeltomasb1 angeltomasb1 · Answer 1 · 2022-11-22T23:07:22+01:00

Futures prices can be used as an indicator of future spot prices because they are based on the current market price of a commodity.

What is one benefit of looking at the prices of such futures contracts to businesses?

Futures prices can be used as an indicator of future spot prices. This allows businesses to predict how much they will need to charge for their commodity in the future.

Futures contracts are often used by businesses to protect themselves from price fluctuations. By looking at the prices of futures contracts, businesses can get an idea of how the market price of their commodity is likely to change in the future. This information can help businesses to make pricing decisions and to hedge their risks.

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