Question $3(6\mathrm{.}5$ points$)$: Hedge

October ${15}^a$ : A producer plans to sell wheat in early July; currently, July wheat futures are trading at $6806.$ The expected basis is $$0\mathrm{.}60$ under.

Docs the producer have a long or short cash position?

Does the producer have a long or short futures position?

To hedge: The producer wil $($buy$/$sell$)$ July wheat futures at ${680}^{\text{'}}6$ per bushel.

What is the expected cash price?

July $1^{at\text{:}}$

The producer must $q,($buy$/$sell$)$ wheat locally in the cash market at $562\text{'}2$ per bushel.

To offset their future position, they mus: $($buy$/$sell$)$ July futures at $599\%4$ per bushel.

What is the actual basis? $q,$

Was the basis stronger, weaken, or the same as expected?

What is the realized price for the producer?

Method $1$:

Method $2.$

Q$.$ The hedge resulted in a realized price of $q,$