Futures contracts reshape markets, impacting prices and commercial decisions.
Commodity futures and options are tools used by businesses to manage risks and make decisions about processing and storage. Despite theories suggesting biases in prices and speculators' behavior, empirical evidence does not support these predictions. Commercial firms use futures contracts to minimize costs, substitute for merchandising contracts, and tie their decisions to futures prices. This affects the allocation of resources, even though futures prices are not great at predicting the future.