Grain Basis, Explained
Basis is the difference between your local cash price and the futures board — the local half of every grain-marketing decision. Here's what it means and why it moves.
What basis is
Basis is the difference between the local cash price a buyer offers you and the futures price on the board:
Basis = local cash price − futures price
If December corn futures are 4.50 and your elevator is bidding 4.20, your basis is 30 under (−0.30). If the elevator were bidding 4.60, you'd have a 10 over (+0.10) basis.
The futures price is national — it's the same number whether you farm in Illinois or Iowa. Basis is the local part of the price. It rolls the elevator, the processor, the river terminal, and the cost of getting your grain there into a single number. That's why two farmers watching the identical futures price can face very different cash decisions.
Why basis moves
Basis is driven by real-world, local supply and demand:
- Harvest pressure. When everyone delivers at once, buyers don't need to bid up to fill space, so basis usually weakens. As stored supplies draw down through the year, buyers often have to bid up — basis tends to firm.
- Local demand. An ethanol plant or feed operation that needs grain now will pull your local basis differently than an area that mostly ships to the river.
- Logistics. Rail availability, river levels, freight costs, or a processor down for maintenance can all swing basis.
Why it matters
Two growers can sell at the same futures price and end up with different checks because their basis differed. Capturing a strong basis — and not selling into a weak one unless you have to — is a big part of how marketing adds or subtracts dollars per acre.
Basis tends to follow seasonal tendencies (often weakest near harvest, firmer into spring), but it can't be precisely predicted — see Can AI Predict Corn Basis? for the honest version, and how AI changes the grain-marketing workflow for where basis fits in the bigger picture.
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