Question
Hello I have an economics question and can not seem to find the answer. Here is an image of it below. Jim is a grower
Hello I have an economics question and can not seem to find the answer. Here is an image of it below.
Jim is a grower of corn and soybeans in Nebraska. He farms 2000 acres and normally plants of his farm to each crop. He usually makes 40 bushels per acre on his soybeans. On February 15, he is contemplating his marketing options for his soybeans. November soybean futures are trading at $12.10. The local elevator is quoting -20 November futures for Sept/Oct delivery. He decides to forward contract half of his soybean crop with the local elevator, and hedges the other half. Unfortunately a drought strikes Nebraska and John only yields half of what he expected on his soybeans. Because of the drought, market prices have risen significantly. On Sept 30, John has harvested all of his soybeans. The Nov. soybean futures have risen to $17.15. The local elevator agrees to cancel the soybean contract shortfall at their bid price of $17.45 per bushel.
D Question 19 19. How many bushels was the shortfall on his forward contracted soybeans? 5000 0 10000 0 15000 0 20000Step by Step Solution
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