It’s freight. It’s margin. It’s a tally of any number of other costs and variables but when it’s all said and done, basis is really nothing more than an incentive to either sell your grain or a reason to sit on it a while longer. While farmers would love to pick apart and object to some of the costs and fees wrapped in to basis, that’s missing the more useful aspect of tracking basis prices — it’s a market signal, pure and simple.
In this Wheat School episode, Jeff Jackson, markets manager of the Alberta Wheat Commission, explains what goes in to basis, likening it to a cover charge at the bar, and how although farmers can’t change basis, it’s worth tracking the basis trend to aid in selling decisions.
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