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

Manch $15$n: A packer needs to buy Live Cattle in carly June. Currently the June Live Cattle

$($LC$)$ futures are trading at $$\frac{175\mathrm{.}650}{c}wt.$ The expected basis is $$\frac{1\mathrm{.}50}{c}wt.$

Docs the packer have a long or short cash position?

Docs the packer have a long or short futures position?

To hedge: The packer wil buy$/$sell$)$ June LC futures at $$\frac{175\mathrm{.}650}{c}wt.$

What is the expected price?

June $10$

The packer must $q,($buy$/$sell$)$ cattle locally in the cash market at $$\frac{185\mathrm{.}025}{c}wt$

To offset their future position, they mus $($buy$/$sell$)$ June futures at $$\frac{183\mathrm{.}00}{c}wt$

What is the actual basis? $q,$

$-$What is the realized price for the producer?

Method $1.$

Method $2$:

The hedge resulted in a realized price of $$