To learn the definition of basis and gain an understanding of the factors that determine basis. To gain an understanding of the seasonal trends in basis. To learn what prices need to be tracked to assist in evaluation of harvest sales or storage decisions.
Basis can be positive or negative depending on the factors that determine basis.
Generally, transportation expense makes up the largest portion of basis. Changes in basis are not as volatile as changes in cash or futures prices. Changes in basis do tend to follow seasonal patterns. Post harvest improvement in basis often occurs because of increased availability of transportation services at a potentially better price and improvements in local supply and demand conditions. Producers need to track two items with respect to basis weekly at all locations they may consider marketing their grain.