2019 Spring Farm Outlook

Page 28 2019 Logan County Farm Outlook Magazine Lincoln Daily News March 21, 2019 F armers today are business owners, and like other business owners, they need to watch the market closely to maximize potential profits. In order to do that, farmers have to know how to keep an eye on the basis of the market. Newcomers to agriculture may hear older farmers talking about basis. They might hear that when basis is negative and the cash is lower than the futures, then the local market has enough of given crop. Too much supply in the market, and the basis falls. Should the market have less supply, the basis can be positive with the cash over the futures. So why is that important? Contemporary cash prices have an effect on future prices. When A layman’s guide to signaling with basis By Derek Hurley the basis across the country is rising, futures prices may rally. Being aware of the basis can give traders insight into the local grain markets. According to Alan Kuis of Prairie Farmer, “basis is the difference between the cash price paid for your grain and the nearby Chicago Board of Trade futures price.” Basis is sometimes referred to as “the voice of the market.” This title comes from an indication on whether or not the market “wants” your grain. Iowa State University Extension grain marketing economist Chad Hart adds, “Basis can be a great signal to help farmers figure out where to sell their Continue 8