If feeding costs are estimated to be $50.00, then a profit potential

 of $1.41 can potentially be "locked-in" by forward contracting on the

 futures market. If this appears to be a satisfactory profit and you

 feel comfortable about locking this potential profit in, then one contract

 (30,000 Ibs.) of live hogs would be sold.

 Narrowing or widening basis

 Examination of Table 4 indicates that the basis during December

 fluctuates from -$0.74 to $3.08 as shown below:


 Week 200-240 Ib. barrows & gilts
 Week in Standard
 number December Basis deviation
 -----Dollars per cwt.-------

 48 1 1.33 3.35
 49 2 -0.74 4.33
 50 3 0.59 4.61
 51 4 -0.45 3.89
 52 5 3.08 1.17

 Source: Table 4


 It is possible, for example, that the hogs are sold in the second

week rather than the third week in which case the average basis histori-

cally has been -$0.74. In effect, the futures quote is $0.74 below the

Florida cash price. Now, steps one and two would be as follows:

 Step 1. Check the futures potential (Narrower basis)

 Item Dollars per cwt.

 December hog futures contract quote in July 52.00
 Basis in December subtract -0.74 a/
 Localized price 52.74

 a/Subtracting a negative number requires an addition function