Futures contracts in investing set prices for future transactions. Unpredictable factors, like in the coffee market, can lead to record-high prices affecting consumers downstream. Buyers and sellers use futures to lock in prices, managing risk and uncertainty in markets spanning various industries like agriculture, finance, and tech.

The history of futures trading dates back to the mid-19th century, with the Chicago Board of Trade standardizing contracts for future goods delivery. Standardization reduced risk and allowed organized trading, expanding beyond agriculture into a diverse asset range. Hedging against price fluctuations and speculation are common uses of futures contracts.

Futures markets cover commodities, financial instruments, and cryptocurrencies, providing stability for industries and investors. Spot trading involves immediate payment and delivery, while futures trading sets prices today for future transactions. Understanding the difference helps businesses and investors manage risk effectively and make informed decisions.

Read more at Yahoo Finance: What are futures?