Now assume that when the cattle are placed on feed at the beginning of the planning period,

the feedlot expects to finish $120,000lb$ of live cattle for the January spot market $($this would

be approximately $90$ head of cattle$).$

a$.$ Based on the size of the live cattle futures contract, once again using the information in

Table $8\mathrm{.}1$ or the CME Group's website, how many live cattle futures contracts should

the feedlot use to hedge two$-$thirds of their planned spot market quantity?

Hedge Quantity $=?$

Live Cattle Futufes Contract Size $=?$

Total Number of Contracts $=$ Hedge Quantity $\frac{?}{?}$ Contract Size $=?$

b$.$ In January, the feedlot sold $110,000lb$ of finished live cattle to the packer $($at a price of

$$120\mathrm{.}00$ per cwt$).$ Calculate their net revenue $($total dollars$)$ based on the combined

outcomes of both the spot market and futures market $($using the same futures market

prices shown in the T$-$account diagram$).$

Net Revenue $=$ Total Cash Revenue $+$ Total Futures Profits $=?$

c$.$ Calculate the net price $($$ per cwt$)$ the feedlot received based on the hedged quantity of

two$-$thirds of the feedlot's expected January quantity where you should divide the net

revenue from the previous question by the total pounds sold in the cash market.

Net Price $=$ Net Revenue $\frac{?}{?}$ Spot Market Quantity $=?$