A farmer expects an output of 500 tonnes of wheat in the month of May. He expects wheat prices in May to go down. The current month is February and the cost of wheat per tonne is ₹ 1043. The May month future of wheat is

Computation of Net Profit/Loss to the farmer, if he hedges the position in the future market: 1. Future Market Transaction: - Farmer sold futures at ₹ 1,172. - Futures expired at ₹ 1,133. - Profit per tonne in futures = Selling Price - Expiry Price = ₹ 1,172 - ₹ 1,133 = ₹ 39 per tonne. - Total profit in futures = 500 tonnes × ₹ 39/tonne = ₹ 19,500. 2. Physical Market Transaction: - Farmer sold wheat in the physical market at ₹ 1,133 per tonne. - Cost of wheat per tonne = ₹ 1,043. - Profit per tonne in physical market = Selling Price - Cost Price = ₹ 1,133 - ₹ 1,043 = ₹ 90 per tonne. - Total profit in physical market = 500 tonnes × ₹ 90/tonne = ₹ 45,000. 3. Net Profit: - Net Profit = Profit from Futures Market + Profit from Physical Market - Net Profit = ₹ 19,500 + ₹ 45,000 = ₹ 64,500.