In hedging with a futures contract, a farmer gains price certainty and risk management. An increase in cash market prices doesn't affect the predetermined selling price from the hedge, protecting against downside risk but not allowing benefit from price increases.
In the case of hedging, when a farmer uses a futures contract to lock in a price for their crop at harvest time, they are hedging against the risk of price fluctuations in the cash market.
If the price of the crop increases in the cash market, the farmer will still sell their harvest at the predetermined price from the futures contract.
While this means they won't directly benefit from the spot price increase, they are protected against the possibility of a price drop.
Therefore, hedging provides price certainty and helps manage risk, though it may prevent the farmer from capitalizing on favorable price movements.