Question
In: Economics
You plan on selling 67 steer calves in January that you expect to weigh 750 pounds each. You have ovserved the following prices ($/cwt) over the last 3 years:
You plan on selling 67 steer calves in January that you expect to weigh 750 pounds each. You have ovserved the following prices ($/cwt) over the last 3 years:
| Cash | CME FC | Basis | |
| 2007 | $89.00 | $99.00 | a. ___________ |
| 2008 | $94.00 | $103.00 | b. ___________ |
| 2009 | $83.00 | $94.00 | c. ___________ |
What is your expected basis for January 2010 (3 year average)? d. ___________
Market Information 9/9/09
| Current Cash 750 lb steer | $87/cwt |
| Jan FC Futures | $101/cwt |
If you placed a hedge on 9/9/09 using Jan futures, what is your expected net sale price?
Assume that on Jan 25 you sell your feeder cattle for $85 per cwt at the local auction and that Jan. FC Futures are at $94 cwt. Show the results of a Futures hedge you placed on September 9 and offset on January 25.
----------| Date | ________| | ------------------------------| Cash | _______________________| | --------------------------------|| Futures || _________________________|| | -------------------------------------| Basis | _____________________________| |
9-Sept | | ________| | e. | | _______________________| | g. || || _________________________|| | i. | | _____________________________| |
25-Jan | | ________| | f. | | _______________________| | h. || || _________________________|| | j. | | _____________________________| |
k. NSP = ____________
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
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