Question

93,442 020 3.392 3.358 3.423 3.385 Oct Agriculture Futures Corn (CBT)-5,000 bu; cents per bu. 369.50 372.75 A 367.50 369.50 1.25 500,405 377.25 380.25 A 375.25 377-25 -1.25 346,739 May Oats (CBT)-5,000 bu; cents per bu. March 256.00 257.50 May Soybeans (CBT)-5,000 bu; cents per bu. 4,155 .50 250.00 254.50 3,027 246.00 253.00 3.00 248.25 254.00 8.25 248,998 1055-50 1061.50 7.75 210,368 March 1057.00 1061.50 May Soybean Meal (CBT)-100 tons; $ per ton. March May Soybean Oil (CBT)-60,0oo lbs; cents per lb. March May Rough Rice (CBT)-2,000 cwt; $ per cwt. March 953.00 960.50 May Wheat (CBT)-5,000 bu.; cents per bu. 1045.00 1050.50 1067.25 1071.50 335.90 338.40 -2.8 126,399 -2.70 122,484 340.70 340.10 342.60 344.80 345.80 34.67 34-98 35.26 34.47 34.67 34-76 34.95 .02 123,991 34.96 118,319 -.03 942.00 -8.00 947-50 9,388 2,516 978.50 984.50 968.00 972.50 8.50 Suppose today is February 10. 2017, and your firm produces breakfast cereal and needs 130,000 bushels of corn in May 2017 for an upcoming promotion. You would like to lock in your costs today because you are concerned that corn prices might rise between now and May. Use Table 231 a. What total cost would you effectively be locking in based on the closing price of the day? (Round your answer to the nearest whole number, e.g., 32.) b. Suppose corn prices are $3.61 per bushel in May. What is the profit or loss on your futures position? (Enter your answer as a positive number. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) a. Total cost b.

Answer 1

Answer:

Closing price of May Futures of Corn CBT Per bushel = 377.25 cents = $3.7725

Required bushels = 130,000

(a) Total cost = 130000 * $3.7725 = $490,425

(b) Spot prices per bushel in May = $3.61

Hence Loss on future position = (3.7725 - 3.61) * 130000 = $21,125

a. Total cost $490,425 b. Loss $21,125