The price of soybeans is currently $9.55 per bushel. The forward price for delivery in one year is $10.70 per bushel. One forward contract contains 5,000 bushels of soybeans. An arbitrageur can borrow money at 4.25% per annum.

1. Is this forward curve in contango or backwardation?
2. Could this scenario be profitable? What should the arbitrageur do and why? (Show calculations) Show the results both per bushel and per contract.

Assume that the cost of storing soybeans = $0 and soybeans provides no income.