Category: Commodity Price

What is Basis.

Basis is the difference between the futures price and your local cash price. For example, if the May futures contract is trading at $220 and the cash price is $200, the cash price is $20 under May ($200 - 220 = -20). So the basis is -20.

More specifically, basis is the difference between the current local cash price and the futures price of the contract with the closest delivery month. For example, corn basis in February is usually defined as the difference between the current cash price and the current March futures price.

Register to read more...