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 Pay Off: 1. Future Market Transaction: - Farmer sold May futures in February @ ₹ 1,172. - Farmer squared-up (bought back) the future position in May @ ₹ 1,155. - Profit per tonne in futures = Selling Price - Buying Price = ₹ 1,172 - ₹ 1,155 = ₹ 17 per tonne. - Total profit in futures = 500 tonnes × ₹ 17/tonne = ₹ 8,500. 2. Physical Market Transaction: - Farmer sold wheat in the physical market in May @ ₹ 1,153 per tonne. - Cost of wheat per tonne = ₹ 1,043. - Profit per tonne in physical market = Selling Price - Cost Price = ₹ 1,153 - ₹ 1,043 = ₹ 110 per tonne. - Total profit in physical market = 500 tonnes × ₹ 110/tonne = ₹ 55,000. 3. Net Pay Off: - Net Pay Off = Profit from Futures Market + Profit from Physical Market - Net Pay Off = ₹ 8,500 + ₹ 55,000 = ₹ 63,500.