The standard deviation of monthly changes in the spot price of live cattle is (in cents per pound) 1.15. The standard deviation of monthly changes in the futures price of live cattle for the closest contract is 1.33. The correlation between the futures price changes and the spot price changes is 0.74. It is now October 15. A beef producer is committed to purchasing 34,000 pounds of live cattle on November 15. The producer wants to use the December live-cattle futures contracts to hedge its risk. Each contract is for the delivery of 5,440 pounds of cattle. (1) What is the hedge ratio? (2) Should the beef producer take a long or short futures position? (3) What is the optimal number of futures contracts?