Archer Daniel Midland plans to buy 75,000 of soybeans in August. The spot price of soybeans is
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Archer Daniel Midland plans to buy 75,000 of soybeans in August. The spot price of soybeans is currently $10.89/bushel. Soybean futures are defined as 5,000bu, $0.01/bu. September soybeans are quoted at 1079.
To fully hedge its position ADM should (Buy? / Sell?)
How many contracts? ___?___
The basis is $___?___
A textbook Hedge will lock in an effective price of $___?___
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