Forward contracts and futures contracts can be used for hedging. Sometimes its more appropriate to use a forward contract instead of a futures contract. Sometimes, its appropriate to use a futures contract instead of a forward one.

You are the chief risk officer for the Tasty Candy Company. Your firm purchases sugar and cocoa as ingredient inputs for the candy products your firm produces.

1. List three reasons to use futures contracts instead of forward contracts to hedge commodities?
2. Explain why the above three reasons are an added value to use futures instead of forwards.