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Business, 06.05.2020 01:00 Jennifer16253

A baker is interested in buying 5000 bushels of wheat on September 2020. He has a target price of $3.15/bushel and wants to hedge against upward price movements. There are no wheat futures contracts with maturity in September, but there are wheat futures with maturity in November. The size of one wheat futures contract with maturity in November is 1000 bushels. What should be the baker’s strategy to hedge against upward price movements?

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A baker is interested in buying 5000 bushels of wheat on September 2020. He has a target price of $3...
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