13 points) Hedging and Long-Term supply Contracts. Consider a breakfast cereal company that will make and sell $30,000,000 of cereal next year. that It's only cost is that it must buy 200,000 bushels of wheat to make cereal. market price per bushel of wheat next year, P, is unknown; the company faces the risk that wheat prices will be high. (Wheat cannot be stored, so you can't buy the wheat this year and store it to use next year.)