July 2: The futures market for commodity A is trading $5.00 for

October delivery. The forward market for A in location y for

October is trading at - $.50 the October futures.

With the cost of moving the commodity, from market z to market y being $.20 & adding profit of $.10, what is the basis for location z for trade to take place between market z and y for delivery in October? (i.e., commodity flow from z to y)

Assume you put the trade on in a).

On October 20, when our contract becomes deliverable, the basis for location r is trading October futures - $.10, location y is trading October futures - $.80, and basis for location z is October futures- $.70. The cost of moving A from location y to r is $.50 plus $.10 profit . Futures price for A is still $5.00.

- What trade, or trades, would you put on to improve your profit? Transport can be sold back in the market for $.05 less than original cost