Finance School of Management Illustration a farmer a baker Suppose the size of thethe farmers wheat crop is 100.000 bushels The forward price is $2 per bushel at the end of the month the farmer will deliver 100.000 bushels wheat to the baker and receive S200.000 from the baker in return Both parties eliminate the risk associated with the uncertainty about the spot price of wheat at the delivery date uesTc 88 Finance School of Management Illustration: a Farmer & a Baker v Suppose the size of the the farmer’s wheat crop is 100,000 bushels v The forward price is $2 per bushel v At the end of the month, the farmer will deliver 100,000 bushels wheat to the baker and receive $200,000 from the baker in return v Both parties eliminate the risk associated with the uncertainty about the spot price of wheat at the delivery date