Futures Contracts

In the maritime context, futures contracts refer to a standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other. The item in question in the maritime industry is often a commodity like oil, gas, or grain. These contracts are traded on a futures exchange, which acts as an intermediary and minimizes the risk of default by either party. Futures contracts are used by maritime businesses to hedge against price or exchange rate risk. For instance, a shipping company might enter into a futures contract to buy fuel at a fixed price, thereby protecting itself against potential price increases in the future. Similarly, an exporter might use a futures contract to lock in a favorable exchange rate for a transaction that will occur at a future date. It's important to note that the parties involved in a futures contract are obligated to fulfill the contract's terms, unlike in options contracts where the holder has the right, but not the obligation, to buy or sell the underlying asset.