Gracie's Grains has distributed a genetically modified grain that has been widely used by NSW wheat farmers. Gracie decides that before this evening's 'Four Corners' expos goes to air detailing the link with Deranged Baker Disorder, she should take up a position to profit from the imminent detrimental impact the news will have on NSW wheat prices, and positive impact on WA wheat prices.

i) If she is prepared to trade in 50 close-dated contracts (of 20 metric tonnes / contract) in each of the NSW and WA wheat futures, outline a possible strategy.

ii) Determine her profit or loss in both positions if both NSW and WA wheat futures prices decrease by exactly 20% immediately following the programme going to air.

Use the settlement price quotations in the following extract from the Financial Review of 1st February, 2012 to answer questions 1 to 4. AGRICULTURAL FUTURES Exercise.':: Prev Opening. SETTLEMENT: $Value : Price. . Price Trade. ... High. Prev Low. Price . Change.. of Chg . Volume li 0/P Greasy Wool (cents per kilogram cleanweight) Futures [GW} Feb 12 1295 1300 1300 1295 1285 -10.00 -250.00 Apr 12 57 1260 1272 1272 1260 1260 0 17 Night Volume: 6 Day Volume: 18 211 Previous O/P: 384 Eastern Australia Feed Barley Futures (UB) Mar 12 190 190 0 1889 Jan 13 200 204 4,00 80.00 Night Volume: 0 Day Volume: 0 2890 Previous O/P: 4779 Australia Sorghum Futures (US) Mar 12 192.5 191.5 +1.00 -20.00 425 May 12 192.5 191.5 +1.00 Night Volume: 0 Day Volume: 0 -20.00 DO 760 Previous O/P: 1185 NSW Wheat Futures (VW] Mar 12 209.5 215.5 216 215.5 216 6.50 130.00 1757 22916 Jan 13 233.3 240 240 240 240 6.70 Night Volume: 107 134.00 Day Volume: 2750 1100 13352 Previous O/P: 36268 WA Wheat Futures (WK) Mar 12 227.5 235 7.50 150.00 1355 May 12 229 236.5 7.50 150.00 Night Volume: 0 Day Volume:0 250 Previous O/P: 1605