1. Should you consider hedging?

(Use information from October 15, pretend you dont know July 15.) (4 pts)

2. Why?

(Use information from October 15, pretend you dont know July 15.) (4 pts)

3. What might make you not hedge, even though it should be considered?

(Use information from October 15, pretend you dont know July 15.) (4 pts)

4. Why was the Net Price Received different than the Net Price Expected?

(Now you know July 15 information) (5 pts)

HEDGE TABLE 10/15/20 Cash 4.4 Corn 7/15/21 Cash Futures JUL Storage Cost/bushel per month 6.15 $ 0.03 Futures JUL 5.1 6.30 Months 9 Brokerage -0.01 E.B -0.20 Cost 0.27 CASH FUTURES BASIS E.B. Date Operation Buy Sell $/bu. 4.4 Operation Sell $/bu. 5.1 $/bu. -0.7 $/bu. -0.7 15-Oct 15-Jul 6.15 Buy 6.30 -0.15 -0.20 Gain (+) or Loss (-) Storage 1.75 -1.20 0.55 0.50 Costs -0.27 -0.27 -0.27 Net From Cash Market -0.01 -0.01 -0.01 Brokerage Net From Futures 1.19 1.19 Net From 0.27 0.27 0.22 Hedge Net Price Recived 4.67 Net Price Expected 4.62 HEDGE TABLE 10/15/20 Cash 4.4 Corn 7/15/21 Cash Futures JUL Storage Cost/bushel per month 6.15 $ 0.03 Futures JUL 5.1 6.30 Months 9 Brokerage -0.01 E.B -0.20 Cost 0.27 CASH FUTURES BASIS E.B. Date Operation Buy Sell $/bu. 4.4 Operation Sell $/bu. 5.1 $/bu. -0.7 $/bu. -0.7 15-Oct 15-Jul 6.15 Buy 6.30 -0.15 -0.20 Gain (+) or Loss (-) Storage 1.75 -1.20 0.55 0.50 Costs -0.27 -0.27 -0.27 Net From Cash Market -0.01 -0.01 -0.01 Brokerage Net From Futures 1.19 1.19 Net From 0.27 0.27 0.22 Hedge Net Price Recived 4.67 Net Price Expected 4.62