Scenario 3 As a cut and wrap cheese processor, you forward sell chunk cheddar cheese based on todays (September 1) block cheddar cash price of $2.4000/cwt. and enter into an October futures position to hedge the risk. The basis for October block cheese futures is $0.0250/cwt. On September 15, you buy block cheese in the cash market at $2.3815/cwt and the basis is $0.0235. Using the above information, answer the following questions:

1. Is this a short or long hedge?

Short Long

2. What is the net hedge price per cwt for the transaction?

3. What happened to basis?

Weakened Remained the same Strengthened