7. Concurrent with your studies you have been maintaining a 1,500 acre farm near Wakaw, Saskatchewan. You expect to deliver 135,000 bushels of oats to the market this coming September, with an average yield of 90 bushels per acre. In February you comitted to hedging your position at the closing prices shown in the table below, using a futures contract issued by Parrish and Heimbecker, Aberdeen SK (P&H). At approximately 120 km round-trip you will spend close to one full month hauling oats next winter, so you'd like to make it worth your while. The contract looked quite attractive because P&H was offering a better settlement price than any of the local buyers. Assume that the market price turns out to be 220.5 cents/bushel at the time you make your delivery in September. How much income will you receive in total from the hedged delivery of your oats? Oats contracts are priced in 5,000 bushel volumes, and prices are provided in cents per bushel. How many contracts will be required, to hedge your complete crop? What is the danger of hedging your complete forecasted production? Discuss. " Open High Low Settle September 211.3 211.9 209.2 225.9