It is now July 2024. You sold a futures contract in October for $5.00, but the July contract price is now $5.50. The cash price offered by your local flour mill is $5.70. Your actual production is 5,500 bushels. You are ready to harvest and sell your wheat. Please explain what you will do? Assuming a commission of $0.01/bushel, calculate how your hedge worked out and show your total revenue based on your marketing decisions. Please explain the result and show your work.

 How does your total revenue with the hedge compare to what you would have received if you had not hedged your expected production? Explain what accounts for the difference.

Answer rating: 100% (QA)

Heres a breakdown of the scenario and how the hedge affects your revenue Selling Your Wheat Cash pri... View the full answer