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Glossary term

Basis

Definition

Basis is the gap between the local price you can sell a commodity for and the national futures price.

Technical definition

Basis is the difference between the local cash price of a commodity and the corresponding futures contract price, reflecting local supply, demand, and transport factors.

Why it matters

Basis affects the actual price a farmer receives and is central to crop marketing decisions that drive revenue.

Example

If the local cash price is below the futures price, the difference is a negative basis.

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