Question: 2XA === 1 Normal 1 No Spa... Heading 1 Heading 2 ont Paragraph Styles Cash market Recall that the futures market and cash market are

2XA === 1 Normal 1 No Spa... Heading 1 Heading 2 ont Paragraph Styles Cash market Recall that the futures market and cash market are two distinct markets. Futures markets are markets for futures contracts, and the cash market is the market for (current or future) physical commodities. Forward contracts therefore are cash market transactions. Let's look at the cash market position of a cotton farmer from May to October. In May you are long in the cash market and the price is $0.62. In October the price has fallen by $0.2, and you sell to your local spinner at that price. Once you agree to sell, you now have a short position in the cash market. Write down your position in the cash market and the price for October below and calculate the gain or loss (per lb) relative to May's price. Position and price: Cash May Long $0.62 October Gain (+) or loss (-)

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