Scenario #1:

In April, you decide to sell 5 contracts of November soybean futures to lock in a price for 25,000 bushels of soybeans to be delivered at harvest.

I want you to complete the transaction at harvest, under three different scenarios; higher futures prices, lower futures prices and steady futures prices. Fill in the blanks in the Tdiagram, showing the price you received in $/bushel or in gross sales revenues (price * quantity). Ignore brokerage costs.

Date	Cash	Futures	Basis
April	Planting starts soon and with November futures above $11/bu., you have a chance to lock in a profitable price for soybeans at harvest.	Sell 5 contracts of November soybean futures to lock in a profitable selling price at harvest. Futures price: $11.10	Expected harvest basis is $0.65X, or 65 cents under the November contract. Expected harvest price is $10.45/bu.
October (harvest)	Sell 25,000 bushels of soybeans to the local elevator for $11.35/bu.	Lift the hedge buy back November soybean future at $12.10/bu.	What is the harvest basis? _____________________
Results	What did you receive in the cash market? $/bu. _____________ $total _____________	What was your gain or loss in the futures market? $/bu. _____________ $total _____________	What final price did you receive for your soybeans? $/bu. _____________ $total _____________