CFTC:
Many people think that futures markets are just about speculating or “gambling.†While it is true that futures markets can be used for speculating, that is not the primary reason for their existence. Futures markets are actually designed as vehicles for hedging and risk management, that is, to help people avoid “gambling†when they don’t want to. For example, a wheat farmer who plants a crop is, in effect, betting that the price of wheat won’t drop so low that the farmer would have been better off not planting at all. This bet is inherent to the farming business, but the farmer may prefer not to make it. The farmer can hedge this bet by selling a wheat futures contract. This document discusses how futures markets work and how they are used for both hedging and speculating.
A reference document, which many of my readers are aware of, but which is good to re-read at times. 
