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Basis price, futures and your bottom line

  • 3 min watch

Victor Aideyan, Senior Risk Management Consultant with HISGRAIIN Commodities Inc., explains how basis price is determined and how it can affect your bottom line.

Highlights

  • Basis refers to the price of a commodity adjusted by your local elevator
  • Basis price is the local cash price for a commodity, minus the futures price set by the Chicago Futures Exchange
  • Producer price  - adding the basis price to the futures price
  • Basis price influenced by transportation and carrying (interest and storage) costs
  • Pick selling price that offers you best net price, while factoring storage and interest costs of delaying selling