AAEC 3301 Assignment 3B Name: Basis? 1. Type of hedge? (Answers in S/bushel only) Cash Futures Sept 1 Sept 1 Owns 5,000 bushels of soybeans Sells 5,000 bushels of January soybeans at with a price objective of $10.50 per $12.00 per bushel bushel Nov 1 Sells 5,000 bushels of soybeans at $9.60 per bushel Nov 1 Buys 5,000 bushels of January soybeans at S10.50 per bushel Gain Loss Gain Loss ? 2 ? Loss ? NET HEDGING: Gain NET HEDGE SELLING PRICE Basis? 2. Type of Hedge? (Answers in S/gallon only) Cash Sept 1 Sells 29,000 gallons of ethanol for April delivery at $ 2.70 per gallon Futures Sept 1 Buys 29,000 gallons of July ethanol at $ 3.20 per gallon April 1 Buys 29,000 gallons of ethanol for April delivery at $2.90 per gallon April 1 Sells 29,000 gallons of July ethanol at $ 3.35 per gallon Gain Loss ? Gain Loss ? ? ? Loss ? NET HEDGING: Gain NET HEDGE BUYING PRICE