Ag Decision Maker Activity - Iowa State University



Ag Decision Maker Activity File A2-05

Grain Marketing Terms File A2-40

Name________________________________________

Use the following answers to complete the definitions relating to "Basis" on Questions 1-7.

Basis Strengthening Basis

Basis Risk Under Basis

Even Risk Weakening Basis

Over Basis

___________________ 1. A variation or risk of change in the basis.

___________________ 2. The difference between the futures price for a commodity and its cash price at a specific location.

___________________ 3. A condition that exists when the local cash price is less than the futures price.

___________________ 4. A condition that exists when the local cash price is equal to the futures price.

___________________ 5. A condition that exists when the local cash price is greater than the futures price.

___________________ 6. Basis movement over time that occurs when the cash price is rising relative to the futures price.

___________________ 7. Basis movement over time that occurs when the cash price is declining relative to the futures price.

Ag Decision Maker Activity Continued… File A2-05

Grain Marketing Terms File A2-40

___________________ 8. Which of the following is the more typical situation with corn prices in the Midwest at harvest time?

Under Basis

Even Risk

Over Basis

___________________ 9. Which of the following is the typical situation with

corn prices in the Midwest at harvest time when a

bumper crop is expected?

Strengthening Basis

Weakening Basis

___________________ 10. Which of the following situations would be

expected with soybean prices in the Midwest when

we move into the spring planting season?

Strengthening Basis

Weakening Basis

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. . . and justice for all

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs.) Many materials can be made available in alternative formats for ADA clients. To file a complaint of discrimination, write USDA, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence Avenue, SW, Washington, DC 20250-9410 or call 202-720-5964.

Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture. Jack M. Payne, director, Cooperative Extension Service, Iowa State University of Science and Technology, Ames, Iowa.

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