Question $4(6$ points$)$: Hedge

January $20{?}^{th\text{:}}$ : Miller needs to buy wheat in late April. Currently, the May wheat futures are trading at $$6\mathrm{.}67.$ The expected basis is $-$$$0\mathrm{.}30.$

Does the miller have a long or short cash position?

Does the miller have a long or short futures position?

To hedge: The miller will $($buy$/$sell$)$ May wheat futures at $$\frac{6\mathrm{.}67}{b}u.$

What is the expected price?

April $30{?}^{th}$

The miller must $($buy$/$sell$)$ wheat locally in the cash market at $$\frac{7\mathrm{.}89}{?}$ bu$.$

To offset their future position, they must $($buy$/$sell$)$ May futures at $$\frac{8\mathrm{.}04}{b}u.$

What is the actual basis?

What is the realized price for the producer?

Method $1$:

Method $2$:

The hedge resulted in a realized price of