Question $3(6$ points$)$: Hedge

October ${15}^{th}$ : A producer plans to sell wheat in early July; currently, July wheat futures are trading at $6606.$ The expected basis is $$0\mathrm{.}52$ 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 $6606$ per bushel.

What is the expected cash price? $$

Julv $1^{st\text{:}}$

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

To offset their future position, they must $($buy$/$sell$)$ July futures at $5974$ 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 $2$: