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

harvest and sale as 150,000150,000

150,000 pounds of orange juice in 33

3

months time. Suppose each orange juice futures contract is for 15,00015,000

15,000

pounds of orange juice, and the current futures price is F0=118.65F_0 = 118.65

F0

=118.65 cents-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.