A future contract is a type of forward contract, which means it's an agreement between two parties to buy or sell an asset at a predetermined price and date in the future. The purpose of this type of contract is to allow businesses or individuals to hedge against fluctuations in prices by locking in the cost of a commodity, security or currency they need for their operations.
For example, if a farmer expects that wheat prices will rise next season, he can enter into a future contract with a grain merchant to sell his harvest at a fixed price today. This way, the farmer is protected from any potential decline in prices and knows exactly how much revenue he'll receive for his crop.
Similarly, investors or companies may use future contracts to protect themselves against adverse movements in currency exchange rates by locking in an exchange rate today for a transaction that will occur in the future. This can help manage risk and provide certainty when conducting business across borders.