Take, for instance, a major food processor who cans corn. If corn prices go up. Since cash and futures prices do tend to move in tandem, the futures position will profit if corn prices rise enough to offset cash corn losses. S peculators are the second major group of futures players. These participants include independent floor traders and investors.
Floor brokers handle trades for their personal clients or brokerage firms.
On the other hand, bad trading judgment in futures markets can cause greater losses than might be the case with other investments. Futures are highly leveraged investments. The money he puts up is not a down payment on the underlying contract, but a performance bond. The actual value of the contract is only exchanged on those rare occasions when delivery takes place. Moreover the commodity futures investor is not charged interest on the difference between the margin and the full contract value.