The article presents a model for firms to make optimal decisions in cash and futures markets, focusing on producers and marketing firms. It discusses hedging and speculation, where speculation occurs when a firm's futures position goes beyond full hedging or when it doesn't offer hedging options with the cash market position. The study compares hedging on futures markets with forward contracting and uses live beef futures to demonstrate how transformation costs for nonstorable commodities should be handled similarly to storage costs for storable commodities.