A wheat exporter receives an order in late July for 50,000 bushels of wheat to be shipped in March of the following year. Since he is short cash wheat, he must purchase the wheat before the shipping date. To protect himself against the risk of rising prices, he decides to hedge 50,000 bushels of March wheat futures on August 1 , at $2.90/bu, the cash price being $.28 under the futures. On February 1, the exporter purchased the cash wheat at $.31 under the March futures, and the hedge was lifted at $2.98 bu. 1. In this situation, the exporter would: a. Initially buy March wheat futures contracts and later sell March wheat futures contracts when he buys the cash wheat b. Initially sell March wheat futures contracts and later buy March wheat futures contracts when he buys the cash wheat 2. Is this a short or long hedge? 3. Did the basis strengthen or weaken? 4. Is this a basis gain or loss? 5. Actual cash purchase price $ 6. Futures gain or loss $ 7. Net price $ /bu