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Commodity Basis
Know More About Commodity Basis And
Basis Trading
Our mission is to take away all physical and perceived borders and give agribusinesses a platform to find and exchange information.
We want to be the leading platform for soft commodity price information and change the agribusiness for the better. We will continue to work together closely with our partners to always have an answer to the needs of the market.
Members of our platform come from all parts of the business and consist among others of Traders, Brokers, Crushers, Shippers and Farmers. Our members have different reasons for using our portal but all see the value in being part of the most comprehensive price platform on the market.
CommodityBasis.com facilitates the sophisticated information and communication network needed to bring the harvest to the household and serve the planets’ most vital needs.
Commodity Basis And Basis Trading
Basis trading is a strategy used by people that trade physical commodities. The basis is defined as the difference between the cash price in the local market and the exchange traded futures price of the same commodity.
Traders in the physical market want to hedge their flat price position because local factors are easier to predict than global factors. When hedging the flat price position the position the trader is left with is a basis position. For hedging a flat price position (or trading the Basis) the futures market is needed to provide liquidity.
There are two ways to trade the Basis
Long the Basis Short the Basis
When a trader buys cash grains and hedges this with selling an equal amount of grain on the futures market the trader is long the basis.
Equivalently if a trader sells grains and offsets this trade with the purchase of grain futures the crusher is short the basis.
CommodityBasis.com allows its members to track the development of Basis levels in their area and around the world. With this we make local markets more international and easier to understand and analyze.
