It is a kind of insurance. Both parties are essential. If there were no hedgers, there would be little economic justification for trading futures contracts. Hedging is a method of forward pricing that reduces risk. But speculating is a way of increasing risk because you must outguess the market.
Most producers are, in fact speculators.
They sink time and money into production yet have no idea whether or not they will make money until their crops are sold. If you use the futures market to forward price your cotton crop, you are a hedger. The position of the remaining 12 percent was not disclosed. The Contract A cotton futures contract is a firm commitment to deliver or receive specified quantities and grades of cotton in a designated month, with price being determined by public action in the pits of a commodity exchange. A futures contract is a legally binding instrument.