A client Beverages needs 150,000 bushels of corn in December 2020 for an upcoming production. Please refer to the WSJ Futures contracts quote that is available on the next page. Suppose today is August 10, 2020, and you would like to lock in your costs today because you are concerned that corn prices might go up between now and December. a) How could you use corn futures contracts to hedge your risk exposure? What price would you effectively be locking in based on the closing price of the day? b) Suppose corn prices are $4.80 per bushel in December. What is the profit or loss on your futures position? Explain how your futures position has eliminated your exposure to price risk in the corn market!

Open Aug Contract Open Open High hilo Low Settle Chg interest Cocoa (ICE-US)-10 metric tons; $ per ton. Sept 2,445 2,514 A 2,445 2,466 24 32.844 Dec 2,458 2,525 A 2.458 2,479 21 69,924 Coffee (ICE-US) 37,500 lbs. cents per lb. Sept 120.65 123.60 120.40 122.05 1.00 72,978 Dec 123.75 126.20 123. 10 124.80 1.00 53 912 Sugar-World (ICE-US)-112,000 lbs., cents per lb Oct 16.79 16.86 16.71 16,82 04 444,725 March 14 17.39 17.43 17.20 17.40 01 216,845 Sugar-Domestic (ICE-US)-112,000 lbs, cents per lb. Noy 20.30 20.30 20.30 20.30 -10 3,774 Cotton (ICE-US)-50,000 lbs., cents per lb. Oct 88.72 89.45 88.53 89.38 85 247 Dec 88.33 89.42 88.06 B9 25 92 154,489 Orange Juice (ICE-US)-15,000 lbs, cents per lb. 138.45 140.25 137.80 138.40 -05 10,299 NOV 138.95 139.90 137.75 138.45 -05 7,542 Dec Sept Sept Sept Aug Dec Metal & Petroleum Futures Contract Open High hilo Low Settle Chg interest Copper-High (CMX) 25,000 lbs.: S per ib. 3.2485 3.2840 3.2485 3.2705 0.0930 1,208 Sept 3.1855 3.2795 3.1745 3.2705 0.0975 89,627 Gold (CMX)-100 troy oz. Sper troy oz. Sept 1283.20 1313 70 1283.00 1310.10 24.70 677 Oct 1286.00 1313.80 1283.50 1310.10 24.60 30,281 1285.90 1313.80 1282.00 1309.90 24.60 244,548 Feb'14 1285.20 1314.00 1285.20 1310 80 24.70 28,698 April 1293.00 1314.00 1290.00 1311.80 24.80 21,051 June 1295.60 1315.30 1295,60 1312 90 24.80 15,771 miNY Gold (CMX)-50 troy oz; S per troy oz. Oct 1291.75 1314.00 1287.00 1310.00 24.50 1,303 Dec 1284.50 1314.00 1281.00 1310.00 24.75 329 Palladium NYM)-50 troy oz. $ per troy oz. Sept 724.50 744.90 723.10 738.55 15.40 33,609 Platinum (NYM)-50 tray oz.; S per troy oz. Sept 1484.10 1503.40 A 1484.10 1490.70 53.30 2 Oct 1440.60 1498.60 1436.20 1491.60 53.30 58,943 Silver (CMX-5,000 troy oz; S per troy oz Sept 19.525 20 310 19.455 20.193 0.685 87,285 Dec 19.550 20 355 19.550 20 244 0.687 38.252 miNY Silver (CMX)-2,500 troy oz.: S per troy oz. 19.550 20300 19.550 20.183 0.675 155 Dec 20.188 20 300 20.188 20 250 0.688 51 Jan'14 20.288 20 288 20 288 20 263 0.688 1 Crude Oil Light Sweet (NYM)-1,000 bbls.: Sper bbl 104.18 104.96 102.22 103.40 -0.97 281,082 Oct 103.68 104.47 101.81 102.87 -1.04 196,037 Nov 102.57 103 26 100.80 101.75 -1.00 131,678 Dec 101.30 101.55 99.65 100.53 -0.96 203,716 June'14 95.35 95.65 93.96 94.83 -0.63 116,032 92.28 92.52 90.94 91.70 -0.51 228,881 Heating Oil No. 2 (NYM-42,000 gal: Sper gal Sept 2.9660 2.9753 2.9193 29574 - 0068 81,254 Dec 2.9788 2.9900 2.9340 29708-0089 46,089 Gasoline-NY RBOB (NYM-42.000 gal: Sper gal. Sept 2.8711 2.8885 2.8161 28576 -0135 90,817 Oct 2.7517 2.7677 2.6992 27383 - 0126 55,011 Natural Gas (NYM)-10,000 MM Btu. S per MMBtu. Sept 3.237 3.326 3.129 3297 .050 264,956 Oct 3.262 3.350 3.154 3.321 .049 169,277 Nov 3.382 3.469 3.281 3.442 .050 125,151 Jan'14 3.657 3.742 3.564 3717 049 159,538 March 3.630 3.710 3.540 3687 .048 94,420 April 3.577 3.656 3.494 3634 .046 115,641 Agriculture Futures Corn (CBT)-5,000 bu, cents per bu. Sept 468.00 475.75 468.00 473.50 5.25 282,579 Dec 457.75 46425 457.00 459.75 1.50 630,80B Ethanol (CBT)-29,000 gal. S per gal. Sept 2.189 2 200 2.173 2.180 -.00 1,874 Oct 1.946 1.946 1.920 1.931 -.00 1.937 Oats (CBT)-5,000 bu, cents per bu. Sept 355.75 362.75 352.00 362.00 9.75 827 Dec 327.00 329.25 325.50 327.00 .25 7,260 Soybeans (CBT)-5,000 bu, cents per bu. Aug 1328.00 1358.50 1328.00 1355.75 28.00 1,935 Nov 1165.00 1190.00 1164.75 1184 25 18.50 313.483 Soybean Meal (CBT) 100 tons. Sper ton. 400.70 424.00 400.70 422.50 22.20 2.280 Dec 347.40 358 80 345,80 356 80 9.40 148,121 Soybean Oil (CBT)-60,000 lbs.: cents per Ib Aug 41.83 41.94 41.63 41.65 .01 1,398 Dec 42.11 42 39 Y 42.04 42.10 177,934 Rough Rice (CBT)-2.000 cwt.: S per cwt. Nov 1557.00 1570.00 1540.00 1546.00 -4.50 4,300 Jan'14 1583.50 1595.00 1585.00 1570.00 -5.00 290 Wheat (CBT1-5,000 bu. cents per bu. Sept 643.00 648 25 639.75 841.25 -2.25 157,181 Dec 655.25 660.25 652.00 653.75 -2.50 181,535 Wheat (KC)-5,000 bu.cents per bu. Sept 699.00 707.00 697.50 702.00 3.00 67,237 Dec 705.00 712 25 702.75 706.75 -.75 50,318 Wheat (MPLS) 5,000 bu, cents per bu. Sept 735.50 741.00 733.00 733.50 -2.75 16,578 Dec 744.50 749.25 741.00 741.50 -3.00 12,020 Cattle-Feeder (CME)-50,000 lbs: cents per lb. Aug 153.700 154.550 153.025 154 250 1.675 7,018 Sept 157.800 159.375 157.150 157 825 1.450 11,698 Cattle-Live (CME)-40,000 lbs.: cents per lb. Aug 122.600 123.675 122.450 122.675 1.450 13,042 Oct 127.000 127 675 128 275 127 075 2.400 142,030 Hogs-Lean (CME)-40,000 lbs., cents per lb. Aug 100.525 101.025 100.250 100.625 .400 17,591 Oct 85.700 85 850 B4.900 85 250 .325 126,316 Lumber (CME)-110,000 bd. ft.: $ per 1,000 bd. ft. Sept 306.00 310.60 301.00 304.50 3,551 Nov 309.10 312 10 303.10 306.90 2,232 Milk (CME)-200,000 lbs., cents per lb. Aug 18.12 18.24 18.08 18.16 .04 3,833 Sept 18.18 18.44 18.14 1838 24 4,743 Interest Rate Futures Treasury Bonds (CBT) S100,000: pts 32nds of 100% Sept 133-280 134-200 133-240 134-090 12.0 577,672 Dec 132-160 133-060 132-150 132-280 12.00 2.836 Treasury Notes (CBT) $100,000; pts 32nds of 100% Sept 126-205 126-290 126-185 126-260 5.5 2,267,487 Dec 125-250 125-310 125-220 125-285 5.5 54,422 5 Yr. Treasury Notes (CBT)-S100,000; pts 32nds of 100% Sept 121-147 121-192 121.140 121-170 1.7 1,614,287 Dac ... 120-240 120-192 120-222 2.00 12,431 2 Yr. Treasury Notes (CBT)-S200,000 pts 32nds of 100% Sept 110-057 110-060 110-052 110-057 2 849,931 Dec 110-015 110-017 110-010 110-012 2,440 30 Day Federal Funds (CBT-$5,000,000, 100-daily avg. 99.908 99.910 A 99.905 99.908 .002 35,783 Sept 99.905 99.905 A 99.900 99.900 29,248 10 Yr. Int. Rate Swaps (CBT) $100,000, pts 32nds of 100% Sept 110.219 110.406 110.141 111.359 219 8,385 1 Month Libor (CME)- $3,000,000, pts of 100% Aug 99.8150 193 Eurodollar (CME)-S1,000,000, pts of 100% Aug 99.7325 99.7350 A 99.7325 99.7325 .0025 39,479 Sept 99.7200 99.7300 99.7200 99.7200 813,834 Dec 99.6850 99.6900 99.6850 99.6850 854 852 March 14 99.6450 99.6450 99.6400 99.6400 0050 796,876 Currenay Futures Japanese Yen (CME)-V12,500,000; S per 100Y Sept 1.0376 1.0440 1.0317 1,0362 -0016 164,224 Canadian Dollar (CME).CAD 100,000: S per CAD Sept 9587 9696 .9578 9684 .0099 103.861 June'14 .9575.9608 .9521 9620 .0098 380 British Pound (CME)-62,500, Sper Sept 1.5487 1.5570 1.5480 1.5544 .0052 143,340 Swiss Franc (CME)-CHF 125,000, S per CHF Sept 1.0852 1.0904 1.0838 1.0880 .0027 35,702 Dec 1.0871 1.0892 1.0863 1.0889 .0027 118 Australian Dollar (CME)-AUD 100,000; Sper AUD Sept .8973 .9113 .8949 9098 .0132 200,103 Mexican Peso (CME -MXN 500,000; S per 10MXN Sept .07830 07923 .07815 07915 .00095 92,396 Euro (CME-E125,000: $ per E Sept 1.3338 1.3402 1.3329 1.3391 .0057 223,360 Dec 1.3345 1.3405 1.3335 1.3395 .0057 4,043 Euro/Japanese Yen (ICE-US)-125,000; per E Sept 128.77 129.08 128.32 129.23 .75 3,481 Euro/British Pound (ICE-US)-125,000, per Sept 0.86 1.00 4,164 Euro/Swiss Franc (ICE-US)-125,000: CHF perc Sept 1.2308 .0022 997 Index Futures DJ Industrial Average (CBT)-S10; xindex Sept 15442 15515 15375 15452 10 14,512 Mini DJ Industrial Average (CBT)-$5 xindex Sept 15448.0 15523.0 15371.0 15452.0 10.0 124,087 S&P 500 Index (CME-S250 xindex Sept 1688.40 1696.80 1684.50 1693.70 5.50 158,610 Dec 1683.00 1689.80 1678.80 1687.30 5.50 3.459 Mini S&P 500 (CME)-S50 xindex Sept 1688.75 1697.00 1684.50 1693.75 5.50 2,791,337 Dec 1681.75 1690.50 1678.25 1687.25 5.50 44,310 Mini S&P Midcap 400 (CME)-S100 xindex Sept 1229.90 1237.90 1228.60 1234.60 5.00 122,719 Nasdaq 100(CME)-S100 xindex Sep! 3118.00 3136.00 3109.00 3127.00 11.00 9,776 Mini Nasdaq 100 (CME)-S20 xindex Sept 3117.25 3136.50 3108.50 3127.00 11.00 405,008 Mini Russell 2000 (ICE-US)-$100 xindex Sept 1045.00 1051.80 1041.50 1047.00 3.10 355, 189 Mini Russell 1000 (ICE-US)-S100 xindex Sept 942.30 943.60 936.50 941.90 3.10 9,967 U.S. Dollar Index (ICE-US)-S1.000 index Sept 81.33 81.40 80.90 31.03 -30 69,003 Dec 81.61 81.63 81.15 B1.26 -30 734 Source-SIX Financial Information Aug Open Aug Contract Open Open High hilo Low Settle Chg interest Cocoa (ICE-US)-10 metric tons; $ per ton. Sept 2,445 2,514 A 2,445 2,466 24 32.844 Dec 2,458 2,525 A 2.458 2,479 21 69,924 Coffee (ICE-US) 37,500 lbs. cents per lb. Sept 120.65 123.60 120.40 122.05 1.00 72,978 Dec 123.75 126.20 123. 10 124.80 1.00 53 912 Sugar-World (ICE-US)-112,000 lbs., cents per lb Oct 16.79 16.86 16.71 16,82 04 444,725 March 14 17.39 17.43 17.20 17.40 01 216,845 Sugar-Domestic (ICE-US)-112,000 lbs, cents per lb. Noy 20.30 20.30 20.30 20.30 -10 3,774 Cotton (ICE-US)-50,000 lbs., cents per lb. Oct 88.72 89.45 88.53 89.38 85 247 Dec 88.33 89.42 88.06 B9 25 92 154,489 Orange Juice (ICE-US)-15,000 lbs, cents per lb. 138.45 140.25 137.80 138.40 -05 10,299 NOV 138.95 139.90 137.75 138.45 -05 7,542 Dec Sept Sept Sept Aug Dec Metal & Petroleum Futures Contract Open High hilo Low Settle Chg interest Copper-High (CMX) 25,000 lbs.: S per ib. 3.2485 3.2840 3.2485 3.2705 0.0930 1,208 Sept 3.1855 3.2795 3.1745 3.2705 0.0975 89,627 Gold (CMX)-100 troy oz. Sper troy oz. Sept 1283.20 1313 70 1283.00 1310.10 24.70 677 Oct 1286.00 1313.80 1283.50 1310.10 24.60 30,281 1285.90 1313.80 1282.00 1309.90 24.60 244,548 Feb'14 1285.20 1314.00 1285.20 1310 80 24.70 28,698 April 1293.00 1314.00 1290.00 1311.80 24.80 21,051 June 1295.60 1315.30 1295,60 1312 90 24.80 15,771 miNY Gold (CMX)-50 troy oz; S per troy oz. Oct 1291.75 1314.00 1287.00 1310.00 24.50 1,303 Dec 1284.50 1314.00 1281.00 1310.00 24.75 329 Palladium NYM)-50 troy oz. $ per troy oz. Sept 724.50 744.90 723.10 738.55 15.40 33,609 Platinum (NYM)-50 tray oz.; S per troy oz. Sept 1484.10 1503.40 A 1484.10 1490.70 53.30 2 Oct 1440.60 1498.60 1436.20 1491.60 53.30 58,943 Silver (CMX-5,000 troy oz; S per troy oz Sept 19.525 20 310 19.455 20.193 0.685 87,285 Dec 19.550 20 355 19.550 20 244 0.687 38.252 miNY Silver (CMX)-2,500 troy oz.: S per troy oz. 19.550 20300 19.550 20.183 0.675 155 Dec 20.188 20 300 20.188 20 250 0.688 51 Jan'14 20.288 20 288 20 288 20 263 0.688 1 Crude Oil Light Sweet (NYM)-1,000 bbls.: Sper bbl 104.18 104.96 102.22 103.40 -0.97 281,082 Oct 103.68 104.47 101.81 102.87 -1.04 196,037 Nov 102.57 103 26 100.80 101.75 -1.00 131,678 Dec 101.30 101.55 99.65 100.53 -0.96 203,716 June'14 95.35 95.65 93.96 94.83 -0.63 116,032 92.28 92.52 90.94 91.70 -0.51 228,881 Heating Oil No. 2 (NYM-42,000 gal: Sper gal Sept 2.9660 2.9753 2.9193 29574 - 0068 81,254 Dec 2.9788 2.9900 2.9340 29708-0089 46,089 Gasoline-NY RBOB (NYM-42.000 gal: Sper gal. Sept 2.8711 2.8885 2.8161 28576 -0135 90,817 Oct 2.7517 2.7677 2.6992 27383 - 0126 55,011 Natural Gas (NYM)-10,000 MM Btu. S per MMBtu. Sept 3.237 3.326 3.129 3297 .050 264,956 Oct 3.262 3.350 3.154 3.321 .049 169,277 Nov 3.382 3.469 3.281 3.442 .050 125,151 Jan'14 3.657 3.742 3.564 3717 049 159,538 March 3.630 3.710 3.540 3687 .048 94,420 April 3.577 3.656 3.494 3634 .046 115,641 Agriculture Futures Corn (CBT)-5,000 bu, cents per bu. Sept 468.00 475.75 468.00 473.50 5.25 282,579 Dec 457.75 46425 457.00 459.75 1.50 630,80B Ethanol (CBT)-29,000 gal. S per gal. Sept 2.189 2 200 2.173 2.180 -.00 1,874 Oct 1.946 1.946 1.920 1.931 -.00 1.937 Oats (CBT)-5,000 bu, cents per bu. Sept 355.75 362.75 352.00 362.00 9.75 827 Dec 327.00 329.25 325.50 327.00 .25 7,260 Soybeans (CBT)-5,000 bu, cents per bu. Aug 1328.00 1358.50 1328.00 1355.75 28.00 1,935 Nov 1165.00 1190.00 1164.75 1184 25 18.50 313.483 Soybean Meal (CBT) 100 tons. Sper ton. 400.70 424.00 400.70 422.50 22.20 2.280 Dec 347.40 358 80 345,80 356 80 9.40 148,121 Soybean Oil (CBT)-60,000 lbs.: cents per Ib Aug 41.83 41.94 41.63 41.65 .01 1,398 Dec 42.11 42 39 Y 42.04 42.10 177,934 Rough Rice (CBT)-2.000 cwt.: S per cwt. Nov 1557.00 1570.00 1540.00 1546.00 -4.50 4,300 Jan'14 1583.50 1595.00 1585.00 1570.00 -5.00 290 Wheat (CBT1-5,000 bu. cents per bu. Sept 643.00 648 25 639.75 841.25 -2.25 157,181 Dec 655.25 660.25 652.00 653.75 -2.50 181,535 Wheat (KC)-5,000 bu.cents per bu. Sept 699.00 707.00 697.50 702.00 3.00 67,237 Dec 705.00 712 25 702.75 706.75 -.75 50,318 Wheat (MPLS) 5,000 bu, cents per bu. Sept 735.50 741.00 733.00 733.50 -2.75 16,578 Dec 744.50 749.25 741.00 741.50 -3.00 12,020 Cattle-Feeder (CME)-50,000 lbs: cents per lb. Aug 153.700 154.550 153.025 154 250 1.675 7,018 Sept 157.800 159.375 157.150 157 825 1.450 11,698 Cattle-Live (CME)-40,000 lbs.: cents per lb. Aug 122.600 123.675 122.450 122.675 1.450 13,042 Oct 127.000 127 675 128 275 127 075 2.400 142,030 Hogs-Lean (CME)-40,000 lbs., cents per lb. Aug 100.525 101.025 100.250 100.625 .400 17,591 Oct 85.700 85 850 B4.900 85 250 .325 126,316 Lumber (CME)-110,000 bd. ft.: $ per 1,000 bd. ft. Sept 306.00 310.60 301.00 304.50 3,551 Nov 309.10 312 10 303.10 306.90 2,232 Milk (CME)-200,000 lbs., cents per lb. Aug 18.12 18.24 18.08 18.16 .04 3,833 Sept 18.18 18.44 18.14 1838 24 4,743 Interest Rate Futures Treasury Bonds (CBT) S100,000: pts 32nds of 100% Sept 133-280 134-200 133-240 134-090 12.0 577,672 Dec 132-160 133-060 132-150 132-280 12.00 2.836 Treasury Notes (CBT) $100,000; pts 32nds of 100% Sept 126-205 126-290 126-185 126-260 5.5 2,267,487 Dec 125-250 125-310 125-220 125-285 5.5 54,422 5 Yr. Treasury Notes (CBT)-S100,000; pts 32nds of 100% Sept 121-147 121-192 121.140 121-170 1.7 1,614,287 Dac ... 120-240 120-192 120-222 2.00 12,431 2 Yr. Treasury Notes (CBT)-S200,000 pts 32nds of 100% Sept 110-057 110-060 110-052 110-057 2 849,931 Dec 110-015 110-017 110-010 110-012 2,440 30 Day Federal Funds (CBT-$5,000,000, 100-daily avg. 99.908 99.910 A 99.905 99.908 .002 35,783 Sept 99.905 99.905 A 99.900 99.900 29,248 10 Yr. Int. Rate Swaps (CBT) $100,000, pts 32nds of 100% Sept 110.219 110.406 110.141 111.359 219 8,385 1 Month Libor (CME)- $3,000,000, pts of 100% Aug 99.8150 193 Eurodollar (CME)-S1,000,000, pts of 100% Aug 99.7325 99.7350 A 99.7325 99.7325 .0025 39,479 Sept 99.7200 99.7300 99.7200 99.7200 813,834 Dec 99.6850 99.6900 99.6850 99.6850 854 852 March 14 99.6450 99.6450 99.6400 99.6400 0050 796,876 Currenay Futures Japanese Yen (CME)-V12,500,000; S per 100Y Sept 1.0376 1.0440 1.0317 1,0362 -0016 164,224 Canadian Dollar (CME).CAD 100,000: S per CAD Sept 9587 9696 .9578 9684 .0099 103.861 June'14 .9575.9608 .9521 9620 .0098 380 British Pound (CME)-62,500, Sper Sept 1.5487 1.5570 1.5480 1.5544 .0052 143,340 Swiss Franc (CME)-CHF 125,000, S per CHF Sept 1.0852 1.0904 1.0838 1.0880 .0027 35,702 Dec 1.0871 1.0892 1.0863 1.0889 .0027 118 Australian Dollar (CME)-AUD 100,000; Sper AUD Sept .8973 .9113 .8949 9098 .0132 200,103 Mexican Peso (CME -MXN 500,000; S per 10MXN Sept .07830 07923 .07815 07915 .00095 92,396 Euro (CME-E125,000: $ per E Sept 1.3338 1.3402 1.3329 1.3391 .0057 223,360 Dec 1.3345 1.3405 1.3335 1.3395 .0057 4,043 Euro/Japanese Yen (ICE-US)-125,000; per E Sept 128.77 129.08 128.32 129.23 .75 3,481 Euro/British Pound (ICE-US)-125,000, per Sept 0.86 1.00 4,164 Euro/Swiss Franc (ICE-US)-125,000: CHF perc Sept 1.2308 .0022 997 Index Futures DJ Industrial Average (CBT)-S10; xindex Sept 15442 15515 15375 15452 10 14,512 Mini DJ Industrial Average (CBT)-$5 xindex Sept 15448.0 15523.0 15371.0 15452.0 10.0 124,087 S&P 500 Index (CME-S250 xindex Sept 1688.40 1696.80 1684.50 1693.70 5.50 158,610 Dec 1683.00 1689.80 1678.80 1687.30 5.50 3.459 Mini S&P 500 (CME)-S50 xindex Sept 1688.75 1697.00 1684.50 1693.75 5.50 2,791,337 Dec 1681.75 1690.50 1678.25 1687.25 5.50 44,310 Mini S&P Midcap 400 (CME)-S100 xindex Sept 1229.90 1237.90 1228.60 1234.60 5.00 122,719 Nasdaq 100(CME)-S100 xindex Sep! 3118.00 3136.00 3109.00 3127.00 11.00 9,776 Mini Nasdaq 100 (CME)-S20 xindex Sept 3117.25 3136.50 3108.50 3127.00 11.00 405,008 Mini Russell 2000 (ICE-US)-$100 xindex Sept 1045.00 1051.80 1041.50 1047.00 3.10 355, 189 Mini Russell 1000 (ICE-US)-S100 xindex Sept 942.30 943.60 936.50 941.90 3.10 9,967 U.S. Dollar Index (ICE-US)-S1.000 index Sept 81.33 81.40 80.90 31.03 -30 69,003 Dec 81.61 81.63 81.15 B1.26 -30 734 Source-SIX Financial Information Aug