Assume that it is currently October 2009 and you trade futures contracts at the last price.

A wool grower anticipates a 22,000 kg clip in December. The grower decides to hedge the entire crop using futures. In December the grower shears 24,000 kg of wool, the auction price for wool is 800 cents per kg and December futures contracts are trading for 805 cents per kg.

1. Calculate the overall value of the clip including the profit or loss from futures trading.
2. Calculate the overall value of the clip in December if drought conditions limit the growers clip to only 1,000kg, the auction price for wool is 1,100 cents per kg and the December futures contracts price is 1,100 cents per kg.

ComdtyCT for explanation. 1 to Configure Columns View Futures 1 1) Edit Columns WOOL FUTURE (SFE) Sydney Futures Exchange Delayed Futures Contracts 9/9 Ticker Last Changel 3) OLV9 Oct09 873.00 +2.00 4) OLZ9 Dec09 915.00 +8.00 5) OLGO Feb 10 unch 6) OLJO Apr 10 unch 7) OLMO Jun 10 unch 8) OLQO Aug 10 unch 9) OLVO Oct10 unch 10) OLZO Dec 10 unch 11) OLG1 Feb 11 unch 2) Chart on CCRV Contract Table Pricing Date 10/15/09 Sort By Expiration Session COMB Tot Volume 46 Open Int 731 Time Bid Ask Open Intl Volume Previous 10:41 866.00 880.00 142 18 871.00 11:17 910.00 920.00 556 28 907.00 10/14 915.00 945.00 917.00 10/14/ 900.00 935.00 914.00 10/14 810.00 914.00 10/14 810.00 895.00 10/14 895.00 10/14 895.00 10/14 895.00 28 OLV9 Comdty DES ComdtyDES Futures Contract Description 22) News Notes SFE Greasy Wool Future Contract Contract Unit: The greasy equivalent of 2,500 kilograms clean weight of merino combing 25) View All Notes Contract Specifications Trading Hours Name WOOL FUTURE (SFE) Octo9 Exchange Local 26) Ticker OLV9 COMB Comdty ELEC 17:10-07:00 16:10-06:00 Exchange SFE-Sydney Futures Exchange PIT 10:30-16:00 09:30-15:00 Underlying Contract Size 2,500 Kilogram Value of 1.0 pt A$ 25 Related Dates Tick Size 1 First Trade Fri Apr 18, 2008 Tick Value A$ 25 Last Trade Thu Oct 15, 2009 27) Price 873 cents/kg First Notice Fri Oct 9, 2009 Contract Value A$ 21,825 @ 10:41:24 First Delivery Fri Oct 9. 2009 Margin Limits Last Delivery Thu Oct 15, 2009