1. What price would a feedlot operator located near Ogden, Utah plan to spend on corn he will be buying in the local cash market
1. What price would a feedlot operator located near Ogden, Utah plan to spend on corn he will be buying in the local cash market on March 1, 2022 if he hedges the corn on August 11, 2021 and the expected basis for March 1 is $0.12 over per bushel? 2. Assume the same buyer as in question 1 and that storage cost for corn between August 11, 2021 and March 1, 2022 is $0.15/bu. What would his net purchase price (cost) for the corn be if: a. He bought the physical corn on 8/11/21 in the cash market when the local cash price was $5.77/bu.? b. He hedged (long position) the corn on 8/11/21 and then offsets the contract on 03/01/22 when local cash price is $5.92/bu. and the March Corn futures price is $5.82/bu.? c. He waited to purchase the corn on 03/01/22 when the basis was $0.10 over per bushel and the futures price was $5.77/bu.?Here's the data: All that's given
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Authors: Bandana Baruah
1st Edition
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