March $15$ th: A packer needs to buy Live Cattle in early June. Currently the June Live Cattle

$($LC$)$ futures are trading at $$\frac{175\mathrm{.}650}{c}wt.$ The expected basis is $$\frac{1\mathrm{.}50}{c}wt.$

Does the packer have a long or short cash position?

Does the packer have a long or short futures position?

To hedge: The packer will

$($buy$/$sell$)$ June LC futures at

$$\frac{175\mathrm{.}650}{c}wt.$

What is the expected price?

June ${10}^{th\text{:}}$

The packer must $($buy$/$sell$)$ cattle locally in the cash market at $$\frac{185\mathrm{.}025}{c}wt.$

To offset their future position, they must $($buy$/$sell$)$ June futures at $$183\mathrm{.}00/$cwt$.$

What is the actual basis?

What is the realized price for the producer?

Method $1$:

Method $2$: