Possibility of falling prices in september

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Assume that it is June, and a framer expects to harvest at least 10,000 bushels of soybeans during September. In June, the cash price for new-crop soybeans is $6 per bushel and the price of November soybean futures is $6.25 per bushel. Each futures contract is for the delivery of 10,000 bushels of soybeans.

-Help the farmer to design the hedging strategy to protect himself against the possibility of falling prices in September.

-By the beginning of September, cash and future prices of soybeans have fallen. The cash price of soybeans is now $5.72 per bushel, and the futures price of November soybean futures is $5.95 per bushel. The farmer sells his soybeans and closes the hedge. What is the net selling price per bushel that the farmer receives in September?

Reference no: EM133071977

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