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On page 14 of The Call Of The Wild, Jack London writes, Invague .pdf
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### On Aug. 15 a feed barley producer feels that \$300t is a good price .pdf

1. On Aug. 15 a feed barley producer feels that \$300/t is a good price to sell the remainder of the unpriced feed barley he/she is about to harvest since the December feed barley futures contract is trading at \$300/t on the ICE. The producer sells five (5) December futures contracts or 100t (5 X 20t = 100t) to equally offset the expected long cash position. On November 20 the local cash price is \$360/t. The producer sells the feed barley for cash and buys back the futures at \$365/t. What is the resulting final price realized and why is it different from the target price of \$300/t? Solution The final realized price is \$365/t. This is due to the reason that the producer has brought the future contract to sell at \$365/t. This way the producer can sell the barely at the rate of \$365/t. A rise in price may be due to the demand or climate factor.
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