Question
Imagine yourself a soybean farmer (its easy if you try). Soybeans are currently selling for $20 per bushel. The March futures contract for 5,000 bushels
Imagine yourself a soybean farmer (its easy if you try). Soybeans are currently selling for $20 per bushel. The March futures contract for 5,000 bushels (Symbol: SR18) is selling for $21 per bushel, a price that reflects carrying costs. Describe, in detail, the specific steps you would take to protect the value of your soybeans crop by trading futures contracts. Assume the cash price of soybeans is $18.00 when you take your crop to market at maturity in late March. Also assume you will take 50,000 bushels to market. Show all calculations and notional values.
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