Futures vs Forwards: Hedging Raw Material Exposure

A financial analyst at Global Corp is evaluating the company's options for managing its exposure to fluctuating raw material prices. The company relies on a specific type of metal that has been volatile over recent months.

The analyst is considering using futures and forwards as potential hedging instruments. In the context of these derivative strategies, explain the differences between futures and forwards, including their respective benefits and risks. Additionally, provide a recommendation for which instrument should be utilized based on the current market conditions and the firm's risk tolerance levels.

In your answer, discuss the implications of liquidity, counterparty risk, and settlement procedures for both instruments. Additionally, illustrate how an appropriate choice affects the overall financial management of the company.