A deferred futures contract is any futures contract farther away from expiration than the nearby futures contract. For example, in the fall you could choose to compute corn basis using the July corn futures contract, which is a deferred contract since the December contract is the nearby contract in the fall. It makes sense to do this with grains because they are a storable commodity, unlike livestock. Computing grain basis using a deferred futures contract makes it possible to evaluate expected changes in the basis over a long period of time. This can be helpful when evaluating storage profitability.
Basis is much easier to predict than either the cash or futures price.
This is because most of the factors that influence a commodity's price affect both cash and futures prices simultaneously. This means that cash and futures prices tend to move together. The ability to anticipate these situations can create a profit opportunity. The mathematical formula used to compute basis is a powerful tool. This works because a hedger effectively locks in the futures price when the futures contract is sold, in the case of a short hedger, or when the futures contract is purchased, in the case of a long hedger.