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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 points: Hedge
October : A producer plans to sell wheat in early July; currently, July wheat futures are trading at The expected basis is $ 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 buysell July wheat futures at per bushel.
What is the expected cash price?
Julv
The producer must buysell wheat locally in the cash market at per bushel.
To offset their future position, they must buysell July futures at 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 :
Method :
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