A futures contract is a forward contract that has been highly standardized and closely specified. As with a forward contract, a futures contract calls for the exchange of some good at a future date for cash, with the payment for the good to occur at the future delivery date. The purchaser of the contract is to receive delivery of the good and pay for it while the seller (here the wheat farmer) of the contract promises to deliver the good and receive payment. The payment price is determined at the initial time of the contract.
