This paper studies the qualitative properties of a model of futures market equilibrium. We characterise the bias (backwardation or contango) in the futures price, the extent to which output is hedged by producers and the output that is produced relative to the case where there is no uncertainty. We show that only three cases can arise and give precise conditions under which these three cases arise when the number of speculators is very large. The conditions involve the nature of the stochastic dependence between the spot price and the random returns that speculators earn on markets in the rest of the economy. *Department of Economics, University of Southern California, Los Angeles, California, 90089-0152, U.S.A. Support from the National Science Foundation (SES 8200432) is gratefully acknowledged. tInstitut fUr Wirtschaftswissenschaften, University of Vienna, Liechtensteinstrasse 13/11, A-1090 Vienna, Austria