In addition, the producer must anticipate cash flow needs to cover ongoing expenses and debt payments. Basis Basis is the difference between the local cash price and the futures price at the time the milk is sold or the feed grain purchased. Basis accounts for transportation costs, quality differences, and local market conditions. Grain basis tables for several locales can be obtained from the Agricultural Extension Service in both Texas and Kansas. A producer will need to calculate the basis for milk FOB his or her pay zone.
Basis can be seasonal and cyclical.
In other words, it may tend to increase or decrease over the production or marketing year or show large changes across years. The BFP basis, as the difference between the Uniform Table 1. 0.39 1.33 Oct. 2.22 1.01 1.18 1.01 2.66 1.38 1.58 Nov. 2.01 1.35 1.74 1.20 4.76 1.74 2.13 Dec. 2.06 1.36 2.02 1.27 3.55 1.51 1.96 Blend price and the BFP, captures changes in the class utilization of milk in the Federal Order. Recently, the Texas market has averaged about 50 percent Class I utilization annually. The BFP contract is settled by cash so that milk does not have to be delivered to settle the contract terms.