$3.(60$ points$)$ You are a soybean producer in Washington County, Mississippi. You will plant $1200$ acres of soybeans, and your expected yield is $50$ bu$./$acre$.$ Your expected harvest date is the first week of October. The data needed for this question are in the Excel file $$Data for Homework $2$ on Canvas. The file contains data for the soybean cash prices for the Greenville location from $2009$ to $2024.$ You will also need to use the weekly soybean November futures prices $($columns G and H$)$ in the worksheet $$Greenville$$ of the Excel file and the daily soybean November futures prices $($column B$)$ in the worksheet $$Nov $24$ Soybean Futures$$ of the Excel file.

Assume you plant your beans in the second week of April. Find the price that the November soybean contract is trading on the second week of April using the weekly futures prices in the worksheet $$Greenville$$ of the Excel file. Calculate an expected basis for the November contract on the first week of October using the historical basis data in the worksheet $$Greenville$$ of the Excel file $($column L$)$ for the Greenville location. Cash and futures prices are reported in $$/$bu$.$ e in the cash market$)$ for a hedge on $25\%$ of your expected total production. $($Note: $1$ soybean futures contract $=5,000$ bu$.)$

Date Cash Mkt$.$ Futures Mkt$.$ Basis

April Week $2\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Exp. Sale Price $($long$/$short$)$ # $($exp$.$ @ harvest$)$

Nov S @ $\_\_\_\_\_$

By July $1,$ your crop is looking good. Rains have been timely and adequate. Disease and insect pressure have been light. You decide to hedge another $50\%$ of your expected production. Find the price the November soybean contract is trading on July $1$ using the daily futures prices in the worksheet $$Nov $24$ Soybean Futures$$ of the Excel file. Use the expected basis for the November contract on the first week of October for the Greenville location calculated in part a$).$ Complete the following:

July $1\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_$

Exp. Sale Price long$/$short # $($exp$.$ @ harvest$)$

Nov S @ $\_\_\_\_\_$

On the first week of October, you complete your harvest. Due to wet weather late in the year, you experience significant production losses. Your actual harvest amounts to $25$ bushels per acre on your $1200$ acres of soybeans. At harvest, you sell your beans and lift your short hedges. Use the Wednesday, September $23$ closing price for the Nov soybean $2024$ contract from the CME website as your futures settlement price. Calculate an actual basis for the Nov contract using the data for the Greenville location. Is the harvest time basis stronger or weaker than the expected basis?

Complete the following:

Week $1$ October Sell beans @ $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_/$bu$.$

Cash Price long$/$short # $($actual basis @ harvest$)$

Nov S @ $\_\_\_\_\_$

Now, complete the following to calculate the final sale price received for your beans and total revenue:

Futures Market:

Gain$/$loss April week $2$ hedge: $($calculate both per bu$.$ and total gain$/$loss$)$:

Gain$/$loss July $1$ hedge: $($calculate both per bu$.$ and total gain$/$loss$)$:

Total gain$/$loss:

Cash Market:

Total Revenue:

Final sale price for all harvested beans $($show calculations$)$:

Compare the hedging strategy above with the no hedge $($sell at harvest$)$ and the selective hedging strategy when a hedge is placed on May $23$rd for $75\%$ percent of the expected output and lifted on August $23$rd$.$ The comparison should be based on the final sale price received from the different strategies.