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Question 3 ( 6 points ) : Hedge October 1 5 t h : A producer plans to sell wheat in early July; currently, July

Question 3(6 points): Hedge
October 15th : A producer plans to sell wheat in early July; currently, July wheat futures are trading at 6606. The expected basis is $0.52 under.
Does the producer have a long or short cash position?
Does the producer have a long or short futures position?
To hedge: The producer will (buy/sell) July wheat futures at 6606 per bushel.
What is the expected cash price?
Julv 1st:
The producer must (buy/sell) wheat locally in the cash market at 562'2 per bushel.
To offset their future position, they must (buy/sell) July futures at 5974 per bushel.
What is the actual basis? Was the basis stronger, weaker, or the same as expected?
What is the realized price for the producer?
Method 1:
Method 2:
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