9. A storage hedge. A grain elevator manager plans to purchase corn in December and store it for future sale. He wants to hedge his stored corn using July 2022 futures. The local cash price in December is $5.00 per bu, and July futures are selling at $5.35 per bu. The manager needs $.25 per bu to cover storage costs from December to June. (a) In the table below, indicate the actions that the elevator manager takes in December (circle buy or sell, indicate the relevant price, and calculate the basis). (3 points) (b) What is the June basis that would allow the elevator manager to just break even on the storage hedge? Show your work. (2 points) (c) In June, the manager decides to sell her stored corn and offset her position in the futures market. The June cash price is $4.25 per bu., and July futures are selling at $4.36. In the table below, indicate the actions the manager takes in June (circle buy or sell, indicate the relevant price, and calculate the basis). (3 points) Cash Market Buy/Sell @ $ July Futures Market Buy/Sell @ $ Basis $ December June Buy/Sell @ $ Buy/Sell @ $ $ (d) Calculate the net returns to storage of the commodity. Show your work. (2 points) (e) What is the objective of the storage hedge, and was the objective achieved? Explain. (2 points) 9. A storage hedge. A grain elevator manager plans to purchase corn in December and store it for future sale. He wants to hedge his stored corn using July 2022 futures. The local cash price in December is $5.00 per bu, and July futures are selling at $5.35 per bu. The manager needs $.25 per bu to cover storage costs from December to June. (a) In the table below, indicate the actions that the elevator manager takes in December (circle buy or sell, indicate the relevant price, and calculate the basis). (3 points) (b) What is the June basis that would allow the elevator manager to just break even on the storage hedge? Show your work. (2 points) (c) In June, the manager decides to sell her stored corn and offset her position in the futures market. The June cash price is $4.25 per bu., and July futures are selling at $4.36. In the table below, indicate the actions the manager takes in June (circle buy or sell, indicate the relevant price, and calculate the basis). (3 points) Cash Market Buy/Sell @ $ July Futures Market Buy/Sell @ $ Basis $ December June Buy/Sell @ $ Buy/Sell @ $ $ (d) Calculate the net returns to storage of the commodity. Show your work. (2 points) (e) What is the objective of the storage hedge, and was the objective achieved? Explain. (2 points)