Snackums, Incorporated, purchases wheat for use in its food manufacturing process. Snackums operates in a highly competitive industry and is rarely able to increase its sales price. On January 1, 2024, Snackums estimates that it only has enough wheat inventory to meet its manufacturing needs for the first half of 2024, and forecasts the purchase of 48,000 bushels of wheat on June 30, 2024, from its supplier, Trigo Farms. Because Snackums is concerned that the price of wheat will increase during the coming months it enters into four June wheat futures contracts on January 1, 2024, to purchase wheat. Each futures contract is based on the purchase of 12,000 bushels of wheat at $6.87 per bushel on June 30, 2024, and will settle in cash at maturity. (For purposes of this problem, the daily margin accounts with the clearinghouse are ignored.) The company must report changes in the fair value of its hedging instruments each quarter. The fair value of the futures contract at inception is zero. Snackums designates the futures contract as a hedge of the variability of cash flows attributed to changes in the spot price of wheat for its forecasted purchase of wheat. Since the critical terms of the forward contract and the forecasted purchase are exactly the same, Snackums concludes that the hedging relationship is expected to be 100% effective. The spot and forward prices per bushel of wheat and the fair value of the forward contract are as follows: The spot and forward prices per bushel of wheat and the fair value of the forward contract are as follows