In this article: http://www.investopedia.com/university/futures/futures2.asp?header_alt=g In the chapter "Profit and Losses-Cash Settlement", the author describes that profit and loss are governed by changes in market prices.
I guess I'm confused as to why there would even be profit and loss in a futures market. The way it was explained, I thought the whole point of a futures contract was to guarantee against the effects of volatility. In other words, you'd enter a contract to be fulfilled for a certain quantity of a commodity at a certain price in advance of a specific fixed date.
So for example, a banana producer agrees to sell 100kg of bananas for $5/kg 3 months from today and the buyer agrees to pay $500 at that date.
If all of those factors are fixed, why do the participants gain and lose money as the price changes in the market?
Is the idea that those changes reflect the price you would get if you want to close your contract by transfering it to someone else? But then, why wouldn't you get the price you paid for initially?
If you were to wait until the date of delivery, would you get the price you agreed to initially, unaffected by price movements?