Question: 2. An elevator operator typically purchases huge amounts of grain from farmers. Assume the following prices, Date Spot Price/Bu September 1 October 1 November

2. An elevator operator typically purchases huge amounts of grain from farmers.

2. An elevator operator typically purchases huge amounts of grain from farmers. Assume the following prices, Date Spot Price/Bu September 1 October 1 November 1 $2.38 It costs the elevator $0.05/Bu/month to store the grain. $2.10 $2.05 $2,20 March Futures Price $2.34 $2.20 An elevator purchases grain from a farmer on September 1 at 4 cents under the spot on that day and immediately sells it for 1 cent over that day's spot price. What is the elevator's hedging position?

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