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It is March, and you plan to sell wheat to your local elevator in mid-June,...

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It is March, and you plan to sell wheat to your local elevator in mid-June, but you are worried that wheat price may fall in June. Therefore, you decide to hedge in the Futures market and sell a futures contract. The July Wheat futures price is $4.65 per bushel, and the cash price in your area in mid-March is normally about $0.35 below the July futures price. Suppose by June the futures price fell by $0.50 to $4.15. Based on above information fill out the tables below and answer the questions that follow. Assume that the mid-June local price is $0.40 below the July Wheat future price, Month Cash Market Futures Market Basis March Expected cash Wheat priceSell July Wheat at $ is $ $ June Sell cash Wheat at $ $ Buy July Wheat futures at $ Loss/gain $ $ Sell cash wheat at $ $ Gain/Loss on futures position Net Selling Price Is the basis narrowing or widening in this case? Is there a basis gain or loss? By how much? Also, explain why there is a basis loss or gain. MacBook Air 000 000 F? FB F4

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