Suppose a farmer is expecting that her crop of oranges will be ready for

harvest and sale as150,000

150,000pounds of orange juice in3

3

months time. Suppose each orange juice futures contract is for15,000

15,000

pounds of orange juice, and the current futures price isF_0 = 118.65

F0

=118.65cents-per-pound.

Assuming that the farmer has enough cash liquidity to fund

any margin calls, what is the risk-free price that she can guarantee herself.