Its September 2015 and United Grain Growers (UGG) wants to hedge the planned sale of 80,000 metric tons of corn in March 2016. Corn is a non-Board grain, and UGG recently acquired this inventory and is storing it in two new concrete high throughput elevators.

Corn futures contracts are available, and to avoid the contracts delivery requirements, UGG will hedge using April 2016 corn futures, where one contract is for 5000 bushels. The initial margin requirements are 1650 per contract, spot price for corn today is 3.70 per bushel, while the futures prices for the April contract is 4.25 per bushel. Note: 5000 bushels 127 metric tons.

1. How many contracts are needed for this hedge? Long or short?
2. What is the total margin requirement?
3. In March 2016, UGG sold corn to the market at the then spot price of 4.00 per bushel. On the sale date they closed the futures contracts (offset them), and the futures price was 4.15/bushel at that time. What is the net per bushel price obtained for corn, reflecting the hedge g/l?