The futures market discovers forward prices providing the contracts are very liquid.

Question

Quizplus · Accepted Answer

The futures market provides forward prices for various commodities and financial instruments, but the availability and accuracy of these prices depend on the liquidity of the contracts being traded. If a particular futures contract is highly liquid, then the market will efficiently discover the forward price through the actions of buyers and sellers. However, if a contract is illiquid, the forward price may not accurately reflect the potential future price of the underlying asset.

The Futures Market Discovers Forward Prices Providing the Contracts Are