Optimal number of contracts for cross hedge

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Reference no: EM131540203

Suppose that a sorghum producer is placing a short hedge on 100,000 bushels of sorghum after planting using corn futures contracts. If the slope coefficient of the regression of sorghum cash price on corn futures prices is estimated to be 0.94, what is the optimal number of contracts for this cross hedge?

Reference no: EM131540203

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