A Producer Has Purchased Cotton Futures That Involve 50,000 Pounds

A producer has purchased cotton futures that involve 50,000 pounds of cotton at a price of $0.80 per pound. By contract expiration the producer finds that cotton prices have declined by $0.07 per pound. As a result of the futures contracts, the producer will:

A) lose $3,500 per contract in the futures market which offsets gains in the cash market.
B) gain $3,500 per contract in the futures market which offsets losses in the cash market.
C) lose $3,500 per contract in the futures market and suffer an opportunity cost in the cash market.
D) gain $3,500 per contract in the futures market and gain $0.07 per pound in the cash market.