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You are a Midwest Soybean farmer. You have just harvested 20,000 bushels of beans. You plan to store half of the beans in your storage
You are a Midwest Soybean farmer. You have just harvested 20,000 bushels of beans.
You plan to store half of the beans in your storage bins until mid-February. (Hint: the Soybean contract is 5,000 bu.)
You need cash now from half of your soybeans so you sell them at harvest. However, you believe the market will rise between now and March. You decide to stay in the market with a synthetic put (buying a call after a cash sale). How would you make a hedging account trade for these two transactions.
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