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What is the effective price

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On March 1 the price of a commodity is $1,050 and the December futures price is $1,059. A producer of the commodity entered into a December futures contracts on March 1 to hedge the sale of the commodity on November 20.

On November 20 the spot price is $990 and the December futures price is $994. The firm closed out its futures position on November 20 at $994 and sold the commodity at the spot price. What is the effective price (after taking account of hedging) received by the company for the commodity?

Reference no: EM133118321

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