[Verse 1]
Sarah wants wheat for her bakery shop
But harvest season's months away
She finds a farmer, shakes his hand
"December wheat, what's your fixed price today?"
This binding promise, paper signed
No cash exchanged, just future trade
The farmer locks his selling price
The baker's costs will never fade
[Chorus]
Forward contracts, future bound
Set the price before you trade
Obligation, both sides locked
No escape when payment's made
Spot deals happen here and now
Forward waits for future's call
F-U-T-U-R-E
That's the difference, that's it all
[Verse 2]
Speculators ride the waves
Betting prices up or down
Hedgers shield from price surprise
Keep their businesses safe and sound
Arbitrageurs hunt for gaps
When forwards stray from fair value
Three players in this market game
Each one seeks a different view
[Chorus]
Forward contracts, future bound
Set the price before you trade
Obligation, both sides locked
No escape when payment's made
Spot deals happen here and now
Forward waits for future's call
F-U-T-U-R-E
That's the difference, that's it all
[Bridge]
Long position buys the asset
Short position sells instead
Settlement date approaches fast
Delivery or cash instead
Counter-party risk lurks near
What if someone breaks their word?
Private deals, no exchange floor
Your handshake must be heard
[Verse 3]
Oil companies hedge their crude
Airlines lock their fuel expense
Currency swaps cross borders wide
Managing risk makes perfect sense
From copper pipes to foreign bonds
Forwards span every market space
Custom terms, bilateral deals
Time and price find their place
[Outro]
Tomorrow's price, today's decision
Forward contracts lead the way
Binding promises, future vision
Spot's immediate, forward's delay