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Hedging and speculation are two fundamental concepts in futures trading, each serving a distinct purpose in commodity markets and contributing to the overall functioning of the market. Hedging is a risk management strategy employed by market participants to protect themselves against adverse price movements in the underlying commodity. It involves taking a position in the futures market that is opposite to an existing or anticipated exposure in the physical market. For example, a farmer expecting to harvest wheat in three _________ __________ ________ _________ __________ _____ _________ ____ ____ __________ ______.
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