How Does a Soybean Farmer Lock in a Price of $5.40

question 86

Multiple Choice

How does a soybean farmer lock in a price of $5.40 per bushel when the cash price at harvest is only $4.90?

• A) Profit in futures market to offset loss in cash market by selling futures contract at $5.40/bushel.
• B) Break even in both markets by buying a futures contract at $5.40/bushel.
• C) Profit in cash market to offset loss in futures market by buying futures contract at $5.40/bushel.
• D) Break even in both markets by selling a futures contract at $5.40/bushel.

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Definitions:

Milling Machine

A machine tool used to shape solid materials by removing excess material through rotary cutters.

Existing Capacity

Current maximum level of output or production that a facility can achieve under normal conditions.

Additional Minute

Additional Minute refers to any extra time accounted for or needed beyond what was initially planned or scheduled, often in context to services or operations.

Most Profitable

Describes a scenario, product, or entity generating the highest profit margin or net income compared to others in a comparative set.