There are trade futures contracts on goods that are inherently heterogeneous, like live cattle, soybeans, or oil.
When one trades a good like gold, all gold is pretty much the same, so all one needs to describe is the purity and the financial impact of variation is minimal. However, cattle for instance may be big or small, they may be different kinds, and based on these as well as other factors the price of an individual animal may differ hugely.
Presumably one can specify in the contract whatever requirements are considered important. But then the futures market would be full of many non-interchangeable contracts, and I am guessing they instead standardize the contracts somehow.
How does this standardization work? Is the contract priced based on the average value of the good, or the worst possible case?