Contract obligations
A commodity futures contract sets terms for buying or selling a commodity at a future date. Contracts may provide for physical delivery or cash settlement. Many positions are offset before delivery. Hedgers use futures to manage an existing price exposure, while speculators accept exposure in pursuit of profit.
Worked contract example
Imagine a contract representing 100 units, quoted in dollars per unit. A rise from $70 to $71 changes the contract value by $100. For a long position, that is a $100 gross gain; for a short position, a $100 gross loss. This invented contract is used only to explain the multiplier.
What to read first
Check the actual contract multiplier, tick size, expiry, delivery rules and margin terms. The deposit is not a maximum loss. Losses can exceed the amount initially deposited. The cited CFTC material describes commodity futures in the U.S.; do not generalise its registration rules to other jurisdictions.
Sources & method
Sources support the referenced concepts. Numerical examples are hypothetical unless stated otherwise. A link does not imply endorsement.