question archive You are the risk manager of Kellog and wheat price is very important for your operations
You are the risk manager of Kellog and wheat price is very important for your operations
Subject:BusinessPrice: Bought3
You are the risk manager of Kellog and wheat price is very important for your operations. The harvesting season is in December and you are speculating that a cold winter will increase the market price of this grain. You are planning to hedge your position on corn futures contracts for December delivery. Today, the spot price of wheat is $500/ bushel and December wheat futures for one contract is valued at $520/bushel. By using hypothetical numbers and graphs, show the hedging result assuming your speculation is true. [This time both asset and futures moved in same direction]
