The primary function of a futures contract is to give commodity users an instrument with which to protect themselves from adverse price movement.

Arbitrage

An arbitrage involves at least two transactions, which allow a market participant to profit from price disparities between different markets and/or different contract months. Theoretically, an arbitrage does not involve any risk.

Two categories of arbitrage can be distinguished ;
Inter market arbitrage consists in taking advantage of price discrepancies between two economically related but geographically separated markets. This strategy is favored by the globalization of markets.

Inter maturity arbitrage is a strategy taking advantage of price discrepancies between different maturities of the same instrument (future/futures arbitrage). It can only be conducted on futures markets. If it is implemented between the cash and the futures market it is called cash/futures arbitrage.

Futures/futures arbitrage implies the simultaneous purchase and sale of futures contracts with different maturities, and abnormal price relationship.

Futures/futures arbitrage may be considered a deferred cash/futures arbitrage;
The purchase of a nearby maturity and the sale of later maturity represent a deferred cash and carry arbitrage.
The sale of a nearby maturity and the purchase of a later maturity represent a deferred reverse cash and carry.