Problem:
You have been hired as a Financial Analyst at "Burger Donalds" and scheduled to begin on September 1, 2012. Your first Assignment involves the Futures Markets. The Burger Production Manager informs that he wants 5 million bushels of wheat on December 31, 2012 of the year to ensure continued and uninterrupted production of Super Burgers. You glance through the Wall Street Journal on September 1 and observe these prices. [Think Cost of Carry Models]
Spot Price of Wheat on Sept 1 (Per Bushel) $7.52
October Wheat futures price (Delivery on Oct 31) $7.56
November Wheat futures price (Delivery on Nov 30) $7.58
December Wheat futures price (Delivery on December 31) $7.60
From Historical company records you know that if you buy the wheat ahead of the required time you can store it at a cost of 2 cents per bushel per month. Outline all your strategies (at least five!) and their implications.