Question: A corn farmer is using corn futures to hedge his crop production. Each Corn contract is for 5,000 bushels. He expects to harvest 500,000 bushels,

  1. A corn farmer is using corn futures to hedge his crop production. Each Corn contract is for 5,000 bushels. He expects to harvest 500,000 bushels, but is uncertain of the exact amount so only sells 90 contracts. He sells June futures contracts at $3.65/bu. At the time spot corn prices are $3.61/bu. At harvest time in late May spot corn is priced at $3.96/bu and he buys to close his contracts at $3.95/bu. If the farmer harvests and sells 500,000 bushels of corn at the late May spot price, what is the net price per bushel he will be selling at including the impact of his hedge?

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