In December 2018, McDonald's approaches a large commercial chicken producer to supply them with chicken meat for their Chicken McNuggets. However, the catch is that McDonald's demands a price agreed upon upfront because it does not want to run the risk of having to change menu prices or incur losses.

A grown chicken (2 kg) is essentially the sum of a baby chick (no cost; byproduct of having grown chicken) and 4 kg of soymeal (which has a variable and highly volatile price). The chicken producer realizes that they can hedge themselves in the soymeal futures market and essentially lock in their cost of raising chicken. The company enters a contract with McDonald's to deliver 50,000 tons of chicken per year for the next 3 years at a fixed price. At that time, soymeal futures contracts trade at US$ 320 per ton. The producer decides to hedge 90% of the total soymeal required to produce and deliver on the agreement with McDonald's and intends to secure the remainder in the spot market as necessary. The maturities of the futures positions are equally distributed across the contract period.

1) On January 1, 2019, what is the $ change in the hedge book of the chicken producer caused by a $1 price increase for a ton of soymeal? (Click to select) $ .

2) By March 2019, prices have risen to $490 per ton. The chicken producer takes delivery of all the hedges that are "rolling off" (maturing) during the month of March 2019. How many tons of soymeal do the maturing futures contracts amount to in that month? What is the average price that the producer pays for the soymeal in that month? $

3) At the end of year 1 of the contract, soymeal prices for all future maturities have fallen to $230 per ton. What is the unrealized P/L of the remaining hedge positions at that time? $ (in million $)