AbstractEmpirically significant differences between forward and futures contracts evidence their imperfect substitutability as preharvest marketing instruments. Certain combinations of market conditions make the two types of contracts complementary rather than interchangeable. Forwards and futures differ conceptually because of lumpiness, marking‐to‐market, and basis. Of these differences, basis constitutes the most important factor. Although lumpiness may affect smaller producers, it represents an inconsequential detail for larger traders. In given years, interest income (cost) resulting from futures margin requirements may reach important absolute amounts. Relative to size of basis and price changes, this factor fails to attain a magnitude of practical significance.