King Cereals, Inc., manufactures breakfast cereals. Over the next year, it will need millions of bushels of corn and wheat to produce its products. The company's CFO is concerned that corn and wheat prices will rise during the year, and she would like to hedge in the futures market.

Which of the following is the best type of hedge position for King Cereals to take in the futures market, and why?

A)

A short hedge, to minimize losses as prices rise

B)

A long hedge, to lock in a specific purchase price

C)

A short hedge, to stabilize wheat and corn prices at current levels

D)

A long hedge, to offset losses if wheat and corn prices should fall instead of rise