Table of contents
- 2023 Harvest Sample Program
- Apply for a cash advance under the Advance Payments Program
- Apply now for an Agricultural Society Innovation Award
- Artificial intelligence, the food sector and the consumer
- Cattle on feed reports show tighter supplies
- Cow inventories – Are we still liquidating
- Feed barley prices are moderating
- Feeder cattle prices are strong
- Forage sources
- Improving on-farm irrigation systems
- Lamb market trends
- Perseverance in the pork sector
- Pet ownership and pet food trends
- Rebuilding Alberta’s cattle herd
- Shop rates is a farm input
- The value of straw
- U.S. hog contraction still ahead
- What to do when crop prices are volatile
- CropChoices updated for 2022
- Agri-News – Newsletter archive
- Elm pruning ban starts April 1
- Nominations open for Agriculture Hall of Fame 2022
- 2022 Crop considerations
- AgriProfit$ cow/calf benchmark report
- Register for Open Farm Days 2022
- Cropping Alternatives 2022 now available
- Preventing wildfires is always in season
- Canadian crop movement
- Certified seed costs
- 2021 Agricultural Society Innovation Award recipients
- Ocean shipping rates – what do they mean for Canadian exporters
- Participate in Halal Expo Canada
- Caution when winter burning
- Understanding canola basis
- Nitrogen prices and exports
- Take part in the SIAL Canada trade mission
- Consider the right time for manure or compost application
- High crop prices vs low 2021 crop yields
- The gift of an Alberta Christmas tree
- Great gifts for commercial producers
- Stocking stuffers for livestock producers
- Invitation to dairy farmers
- Apply for an Agricultural Society Innovation Award
- Growing gifts for gardening enthusiasts
- Canadian crop usage
- Cattle prices and above-average sales
- Alberta Open Farm Days a big success
- Better safe than sorry with winter burning
- Natural gas prices
- Consider the right source of manure or compost for field application
- Stored canola is well worth protecting
- Dealing with food loss and waste
- Live cattle imports and cattle slaughter both higher
- COVID-19 and demand for e-commerce
- Sugar beets are important to Alberta’s economy
- The canola market – sell, replace or hold
- Canadian Agricultural Partnership Farm Technology program
- Canadian Agricultural Partnership Water program
- Diagnosing pesky forest pests
- Field selection for fall manure or compost application
- Alberta lamb prices continue to be strong
- Harvest Sample Program
- 2021 Alberta nitrogen prices
- Prevent lead poisoning on pastures
- Be in the know this wildfire season
- A canola pricing option to consider
- Sign up now for the 2022 Dairy Cost Study
- Richardson’s Ground Squirrel control
- FireSmart your spring cleaning – Around your home
- COVID-19 and meat price trends
- Alberta rat control - taking care of business
- Forward pricing wheat
- FireSmart your spring cleaning – Around your property
- Crop Reporting Program
- Alberta approved farmers' markets now open
- Albertans can do their part to prevent wildfires
- Minimal canola carryover
- Hard work pays off for Sherwood Park-based company
- May gardening possibilities based on frost probabilities
- Cattle on feed inventories
- Using the Alberta Climate Information Service Fusarium Risk Tool
- The Canadian dollar and commodity prices
- Okotoks-based company wins gold at SIAL’s Innovation competition
- Dangers of blue-green algae
- Help protect Alberta’s beautiful elm trees
- Weather and weather data at your fingertips
- Fed cattle prices holding strong
- Fireworks and exploding targets can cause wildfires
- Put option basics
- Risk to bighorn sheep and mountain goat populations
- Lamb and sheep market update
- Interactive export catalogue launched
- Global appetite for pork
- COVID-19 and foodservice trends
- Video Ante-Mortem Inspection program
- Crop prices have fallen - back to marketing basics
- 2022 Alberta canola seed costs
- Register for Getting Into Food Service
- Sheep industry fares well despite challenges
- Canadian canola crop prospects
- Register for Vendor 101 training
- Learn about the legalities of the food co-packing industry
- Bunnies and biosecurity – What you can do
- Canola crop options – Sell, replace or store
- Optimism for fall calf prices
- Smaller cow herd seems likely
- Determine the right rate for manure or compost application
- Agricultural Society Innovation Award accepting applications
- Get an assessment of your grain’s quality
- AgriProfits supports the Canadian Cow-Calf Cost of Production Network
- Alberta and U.S. cattle price spreads
- Advance Payments Program
- Change in AOPA Livestock Type Calculator
- Consider short-term in-field manure storage
- Uncertainties in the lamb market
- Keep safe burning practices top of mind
- The Pacific Northwest – A priority export market for Alberta companies
- Learn about exporting to the U.S. Midwest
- Growing opportunities for health products in the Mexican market
- Canadian crop deliveries and exports
- AgriProfits – Dairy Cost Study program
- Accessing free market intelligence
- Alberta hay prices
- Improve returns from culled cows
- Understanding the basis for crops
- 2022 Cattle market review
- Getting more Alberta products on the shelf
- Communication - A key to any successful business
- Register for the Farm to Market to Table Conference
- Check those bins
- Winter manure management considerations
- Recognizing innovative agricultural societies
- Cattle by the numbers
- Canola price seasonality
- Jack Lewis inducted into the Agriculture Hall of Fame
- Tracking environmentally sustainable agriculture in Alberta
- Bruce Beattie inducted into Agriculture Hall of Fame
- COVID-19 and healthy food trends
- Simone Demers-Collins inducted into Agriculture Hall of Fame
- 2022 Alberta lamb and sheep market update
- Assess manure storage and wintering site locations
- Register for Open Farm Days 2023
- Cropping Alternatives 2023 now available
- La Nina boosts Australian crop production
- Hog market update
- COVID-19 and vitamins and supplements
- Guidelines add clarity when investigating sites for manure facilities
- Strong Canadian crop movement to date
- Keep your Premises Identification account up to date
- CropChoice$ updated for 2023
- U.S. Choice-Select boxed beef price spread
- Trends that will shape the grocery industry in 2023
- How to use CropChoice$
- Retail and foodservice sales slowly returning to pre-pandemic normal
- Why bighorn sheep and domestic sheep or goats should not mix
- 2023 Crop Reporting program
- Canadian canola market
- 2023 Alberta approved farmers' markets now open
- Dangers of blue-green algae when temperatures rise
- Can Canada see beef herd expansion in 2023?
- Canola usage remains strong
- Lamb and sheep market remains resilient
- Benefits of installing shallow buried pasture water pipelines
- Oat price outlook improves
See event listings and more articles in this edition of Agri-News: December 12, 2022 issue
“Basis for agricultural commodities that are associated with a futures market is the difference between a cash price and a futures price,” says Neil Blue, provincial crops market analyst with the Alberta government. “Specifically, basis is calculated as ‘cash price minus futures price.’”
When the result of that calculation is positive, with the cash price higher than the futures price, that is referred to as an ‘over’ basis. In that case, an example basis quote is ‘$5 over the March futures’. When the calculation results in a negative number, with the cash price less than the futures price, that is referred to as an ‘under’ basis. An example basis quote in that case is ‘$8 under the March futures’.
The basis for crops contains costs of a difference between the cash and futures markets for crop location and costs involved in handling and storing the commodity. Basis can include freight, elevation, cleaning, storage, risk and interest during the holding period. Basis also includes the buyer’s profit in dealing with a commodity.
Basis for futures-related commodities is the way that buyers signal their eagerness to acquire a commodity, strengthening their basis relative to the futures price when they want to contract more of a product, and weakening their basis when they are less interested in contracting that product.
“The basis for canola is easy to understand because the canola futures contract price is in Canadian dollars,” explains Blue.
For example, a current cash price bid by a canola buyer for January 2023 delivery is $860/tonne with the January futures at $840/tonne. Using the formula cash price minus futures price results in a basis of plus $20/tonne, or $20 over the January futures.
The basis levels for wheat are more difficult to interpret since the U.S. wheat futures prices are in U.S. dollars. There is a new Vancouver-based hard red spring wheat futures contract provided by the CME Group, but it is also denominated in U.S. dollars. Most grain companies are quoting wheat basis as ’Canadian cash price minus U.S. futures price’. The exchange rate is contained within the basis.
“That method is simple to calculate, but difficult to interpret,” points out Blue. “Some grain companies, in calculating the wheat basis, first convert the U.S. wheat futures price to Canadian dollars to use in the formula. That method is the standard used for calculating basis levels for the livestock markets of cattle and hogs.”
Example of the wheat basis calculation (for January delivery):
December 6, 2022 Alberta grain company hard red spring wheat cash bid $430/tonne |
MINUS |
Minneapolis Grain Exchange March hard red spring wheat futures ($8.96 U.S./bushel) |
$8.96 U.S./bushel X 36.743 bushels/tonne/0.7332 exchange rate = $449/tonne |
EQUALS |
Basis of that grain company $(19)/tonne or negative $19/tonne |
A source of general basis levels for Hard Red Spring wheat and Canada Prairie Spring wheat is the website for PDQ (price and data quotes) administered by the Alberta Wheat and Barley Commission. The wheat prices and basis levels available on this site provided by the Western Grain Elevators Association represent an average from numerous grain companies within a region and use the ‘Canadian cash minus U.S. futures price’ method of basis expression.
“Although the wheat basis levels provided on the PDQ are general and expressed with the method of including the Canadian dollar exchange rate (Canadian cash price minus U.S. futures price), the historical price and basis data available give an indication of basis ranges over time. Most of the time the Canadian dollar is discount to the U.S. dollar, resulting in a positive basis. The basis range over the past several years using that calculation method has ranged from positive $8/tonne to positive $105/tonne, with an average of positive $50/tonne,” explains Blue.
Contact
Connect with Neil Blue for more information.
Phone: 780-422-4053
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