2. The standard deviation of monthly changes in the spot price of live cattle in Nebraska is 1.2c/lb (cents/pound weight). The standard deviation of monthly changes in the Chicago Mercantile Exchange (CME) futures price for live cattle for the closest contract is 1.4c/lb. The correlation (r) between monthly changes in the CME futures price and monthly changes in the Nebraska spot price is 0.7. On October 15 , a Nebraska beef producer is committed to purchasing 200,000lbs of live cattle on November 15 . He proposes to use the CME December live cattle futures contract to hedge the associated risk. Each contract specifies delivery of 40,000lbs of cattle. What strategy should he follow