Assume you are a wheat producer in UK with a wheat crop to be harvested in Nov 2020. Today is 15^th May 2020 and the January 2021 UK futures contract at the UK stock exchange is trading at $354/tonne. You expect to sell 301 tonnes of wheat and each contract is equivalent of 21 tonnes

Today's forecast of late January 2020's expected basis is $26 /tonne.

• Calculate the Expected Forward Price
• Assume that the hedge is offset on 05/01/2021 when the January UK Wheat (WK) contract price is trading @ $326 /tonne and the actual basis is $6.00/tonne weaker than expected

Complete the T-Bar Diagram and compute the Actual Sale Price