Question $5(5$ points$)$: Hedge

Mav $20$ th: Producer plans to sell corn in early November. Currently the December corn futures are trading at $$5\mathrm{.}33.$ The expected basis is $-$$$0\mathrm{.}30.$

Does the producer have a long or short cash position?

To hedge: The producer will $($buy$/$sell$)$ Dec corn futures at $$\frac{5\mathrm{.}33}{b}u.$

What is the expected price? $$

Nov. ${10}^{th\text{:}}$

The producer must $($buy$/$sell$)$ corn locally in the cash market at $$\frac{6\mathrm{.}18}{b}u$

To offset their future position, they must $($buy$/$sell$)$ Dec futures at $$\frac{6\mathrm{.}58}{b}u.$

What is the actual basis? $$

What is the realized price for the producer?

Method $1$:

Method $2$: