To answer questions 5 through 15, please refer to the following scenario: Lauren is a dairy farmer in the Central Valley. She has a 3000 cow dairy with average annual production of 25,000 pounds per cow. It is November 1 and times are tough but she sees an opportunity to possibly lock in some profit using class III milk futures for 3 months worth of production through January of next year. She calculates that her local milk basis is +2.00. December futures are trading at $20.50 per hundredweight, with January at $21.00. She has locked in some of her feed with forward contracts, but still is open for her corn and soy meal. December corn futures are trading at $3.80 and March at $3.92. The corn basis is +$1.25, and the soymeal basis is + $55. December soymeal futures are $370 and March is $385. She is feeding 16 lbs. per day of rolled corn and 4 lbs. per day of soy meal per cow. 16x3000 nov: 30 Dec 31 245 380 Question 14 0/1 pts 14. What price for milk has she locked in? (Hint: same as #12 above, only for milk). $21.50 $22.66 $23.75 $24.00 Question 15 0/1 pts 13000 15. Approximately how much gross margin per cow has she locked in? (Hint: calculate the com cost per day for one cow by converting the per bushel corn cost in cost per pound of corn. There are 56 lbs. per bushel of cor. Multiply the cost for corn per pound by the number of pounds each cow eats per day. Do the same for soymeal. Calculate the revenue for each cow by calculating the average daily production for each cow in pounds and multiply by the revenue per pound of milk. Take the daily revenue per cow you have calculated and subtract the daily cost of corn and the daily cost of soymeal per cow to get the gross margin per cow). To answer questions 5 through 15, please refer to the following scenario: Lauren is a dairy farmer in the Central Valley. She has a 3000 cow dairy with average annual production of 25,000 pounds per cow. It is November 1 and times are tough but she sees an opportunity to possibly lock in some profit using class III milk futures for 3 months worth of production through January of next year. She calculates that her local milk basis is +2.00. December futures are trading at $20.50 per hundredweight, with January at $21.00. She has locked in some of her feed with forward contracts, but still is open for her corn and soy meal. December corn futures are trading at $3.80 and March at $3.92. The corn basis is +$1.25, and the soymeal basis is + $55. December soymeal futures are $370 and March is $385. She is feeding 16 lbs. per day of rolled corn and 4 lbs. per day of soy meal per cow. 16x3000 nov: 30 Dec 31 245 380 Question 14 0/1 pts 14. What price for milk has she locked in? (Hint: same as #12 above, only for milk). $21.50 $22.66 $23.75 $24.00 Question 15 0/1 pts 13000 15. Approximately how much gross margin per cow has she locked in? (Hint: calculate the com cost per day for one cow by converting the per bushel corn cost in cost per pound of corn. There are 56 lbs. per bushel of cor. Multiply the cost for corn per pound by the number of pounds each cow eats per day. Do the same for soymeal. Calculate the revenue for each cow by calculating the average daily production for each cow in pounds and multiply by the revenue per pound of milk. Take the daily revenue per cow you have calculated and subtract the daily cost of corn and the daily cost of soymeal per cow to get the gross margin per cow)
