Overview of Commodity Futures Contracts

As the global economy continues to evolve, many investors are looking into alternative investments such as commodities. One popular method of gaining exposure to commodities is through the use of commodity futures contracts. These contracts allow investors to lock in prices for commodities in the future, which can serve as a hedge against price volatility.

Discuss the basic characteristics of commodity futures contracts, including their structure, pricing, and the primary benefits and risks associated with investing in them. Illustrate your points with examples where applicable.