Hedging Copper Price Risk with Futures Contracts

Franklin Enterprises is a manufacturing company that uses copper as a significant component in its product line. The company is concerned about the rising prices of copper and is considering using futures contracts to manage its price risk. Specifically, they are weighing the benefits of entering into a copper futures contract versus making direct purchases of copper at the spot market price.

The current spot price of copper is $4.00 per pound, and the futures price for delivery in three months is $4.20 per pound. Franklin Enterprises forecasts that copper prices could rise up to $4.50 per pound within the next few months. Given this information, what strategy should Franklin Enterprises consider to hedge its price risk effectively?