• Assume you are a grain producer and you want to sell some corn for December delivery. The questions below present different scenarios for futures price and basis between today and December. In each case, indicate which contract(s) you would use and explain your reasoning.

Scenario 1: you expect that futures price will decrease and basis will widen.

Which contract(s) would you consider using to sell your grain? Explain your decision in detail both in terms of futures price and basis.

Scenario 2: you expect that futures price will decrease and basis will narrow.

Scenario 3: you expect that futures price will increase and basis will widen.

Scenario 4: you expect that futures price will increase and basis will narrow.