Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Johanna is grain farmer in Grand Island, NE. Last fall, she decided to sell her corn before harvest for delivery in March 2023. On August
Johanna is grain farmer in Grand Island, NE. Last fall, she decided to sell her corn before harvest for delivery in March 2023. On August 1, 2022 shesold her grain using futures contracts for March 2023 delivery. She locked in a futures price of $6.16/bu.Then, in March 2023 she delivered her grain, offset her hedge, got paid and was done with her corn harvested last year.
[a] The chart below shows corn futures prices for March 2023 delivery (orange line) and May 2023 delivery (blue line) between 8/1/2022 (which was the day Johanna started her hedge) and 3/14/2023 (which was the last trading day for the futures contract for March 2023 delivery). Futures prices are in $/bu.