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

October $1^{th}$ : A producer plans to sell wheat in early July; currently, July wheat futures are trading at $7800.$ The expected basis is $$0\mathrm{.}60$ under.

Does the producer have a long or short cash position?

Does the producer have a long or short futures position?

To hedge: The producer will $($buy$/$sell$)$ July wheat futures at $7800$ per bushel.

What is the expected cash price?

July $1_{?}^{st\text{:}}$

The producer must buy$/$sell$)$ wheat locally in the cash market at ${724}^{\text{'}}0$ per bushel.

To offset their future position, they must $($buy$/$sell$)$ July futures at $779\text{'}0$ per bushel.

What is the actual basis?

$-$Was the basis stronger, weaker, or the same as expected?

What is the realized price for the producer?

Method $1$:

Method $2$:

The hedge resulted in a realized price of