lumpy asked in Business & FinanceInvesting · 8 years ago

Risk Management: Need help with headging question?

Question

A cattle farmer expects to have 120,000 pounds of live cattle to sell in 3 months. The live cattle futures contract on the Chicago Mercantile Exchange is for the delivery of 40,000 pounds of cattle. How can the farmer use the contract for hedging? From the farmer's view point, what are the pros and cons of hedging?

Thanks everybody

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