Question: Scenario 1 As a feed yard operator, on January 1 you have 200 head of cattle in the feed yard that will be ready for

Scenario 1 As a feed yard operator, on January 1 you have 200 head of cattle in the feed yard that will be ready for market in late May. You plan to market the cattle at 1,250 pounds. The current cash price for Live Cattle is $133.55/cwt and June futures are trading at $135.05. In May, you sell 200 head of cattle at an average weight of 1,250 pounds in the cash market. You offset your position in the futures market with June Live cattle contract trading at $133.95. The basis is -$1.50. Using the above information, answer the following questions: 1. Is this a short or long hedge? Short Long 2. How many contracts will the operator enter into? 3. What is the net hedge price per cwt for the transaction? (Hint: Divide total revenue by total pounds sold)

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