Farmers can lock in prices with contracts

Farmers can sell futures contracts at the start of the season, to protect themselves against the future market values of their commodities fluctuating due to supply and demand changes.

For example, the farmer can lock in the price of wheat at planting time, with a contract agreement to deliver a certain tonnage of wheat to a specified place, on a certain date in the future, for a certain fixed price.

The farmer no longer worries about a low wheat price at harvest time, but also gives up the chance at making extra money from a high wheat price.