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Copyright 2005, Board of Trustees, University
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F731 seth Pride Blythe Economic Information
"Steve Ford Report 282
Tim Hewitt






North Florida Wheat Basis, 1982-1989






i,,ra i7


I. r

















Food & Resource Economics Department
Agricultural Experiment Stations and
Cooperative Extension Service
Institute of Food and Agricultural Sciences December 1990
University of Florida, Gainesville 32611











North Florida Wheat Basis

1982-1989


Beth Pride Blythe, Steve Ford, and Tim Hewitt'






Abstract The wise use of futures markets for risk management purposes requires

information about local commodity basis. Historical data and summary analysis is provided

for wheat basis in Campbellton, Florida. A brief description of the components and use of

basis is provided with graphical analysis.



key words: wheat, basis, futures market, hedging



















"Graduate Research Assistant and Assistant Professor, Food and Resource Economics
Department, University of Florida, Gainesville, and Associate Professor, North Florida Research
and Education Center, Marianna.

I









TABLE OF CONTENTS




Abstract

List of Tables and Graphs iii

Introduction 1

Basis Terminology 1

Factors Affecting Basis 2

Using Basis 3

Basis Tables and Graphs 5

Summary 7

References 8

Tables and Graphs 9-18


























ii









LIST OF TABLES AND GRAPHS



Table 1 Harvest Contract Basis 9
Table 1 Harvest Contract Basis 9

Table 2 Current Contract Basis 10

Figure 1 Cash Prices 11

Figure 2 Harvest Contract Basis 12

Figure 3 Current Contract Basis 13

Figure 4 Average Basis Calculation Harvest Contracts 14

Figure 5 Average Basis Calculation Current Contracts 15

Figure 6 Harvest Contract Average 16

Figure 7 Current Contract Average 17

Figure 8 Price and Basis Variability 18
























iii









INTRODUCTION

Wheat producers are constantly faced with production and market risks. Various

strategies can be used to minimize these risks. Market or price risk can be effectively

managed with a marketing plan that includes the use of futures markets through hedging or

using options. The use of futures markets allows producers to minimize downside cash price

risk by establishing a price floor or a price range. The determination of the final price

producers receive using such marketing strategies is affected by deviations in the expected

difference between local cash prices and futures contract prices at marketing. This difference

is called the basis. This publication defines basis and discusses terms frequently associated

with basis analysis. Several of the factors which affect basis are also discussed. A brief

section is included on understanding the importance of basis in hedging. The remainder of

the publication contains wheat basis tables and graphs calculated for Campbellton, a major

sales point for commodities grown in North Florida. These graphs and tables provide

information about historical wheat basis and its behavior over time.



BASIS TERMINOLOGY

Basis is calculated by subtracting the price of a futures contract from the commodity

cash price at a particular point in time. For example, if July wheat contracts are trading for

$3.40, and the local cash market for wheat in June is $3.20 per bushel, the basis is 20 cents

under the July futures price ($3.20 $3.40 = -$0.20). Basis is always determined for a

particular market location since cash prices differ from market to market. Basis may be

calculated as a current basis or a harvest basis. Current basis is found using the nearby or

current futures contract month. Harvest basis is calculated using the contract which expires




1










near the harvest month. For wheat, the harvest month contract is typically the July contract.

The current basis and the harvest basis are the same during the harvest season.

There are several characteristics to consider when analyzing basis. A basis is said to

be under if the cash price is lower than the futures price and over if the cash price is higher

than the futures price. If the basis becomes more positive over time, the basis is

strenathenina. Conversely, a basis that becomes more negative over time is weakening.

Basis also narrows and widens. A basis narrows as cash and futures prices converge. A

narrowing basis typically occurs near harvest when cash prices are peaking and futures prices

reflect only transportation costs. Basis usually widens after harvest, as cash prices fall and

futures prices rise to reflect storage and interest costs.



FACTORS AFFECTING BASIS

The following economic factors typically affect basis.

Transportation Costs. The basis reflects costs of moving a commodity from a

production point to a futures delivery point. For example, if the cost to move wheat from

Florida to Chicago, the delivery point for futures contracts, is 40 cents per bushel, then the

wheat price in Chicago should be at least 40 cents higher than prices in Florida. If not, wheat

will not be transported to the Chicago market. The shorter the distance between markets,

the narrower the basis will be.

Storage Costs. Monthly storage costs accumulate during the crop year. The further

away the delivery month, the higher the carrying charges will be to reflect storage costs until

that time. As a futures delivery month approaches, carrying charges will decline until the

basis reflects mainly transportation costs.




2









Interest Costs. Interest costs are incurred with stored commodities since either

borrowed or equity capital is committed to the investment. The longer commodities are

stored, the longer cash returns are delayed, causing the interest portion of the basis to be

greater the further away from the futures contract maturity.

Local Market Conditions. Supply and demand determinants in local cash markets may

differ from those in the national market. A commodity may command a premium over the

futures price or be discounted relative to the futures price because of local commodity

surpluses or deficits. Local supply and demand for a commodity should be considered when

localizing or adjusting futures prices for basis. Seasonal local supply and demand conditions

are particularly important to consider.

Additional factors affecting the basis may include: variations between the cash

commodity quality and the contract grade specifications; supply, demand, and prices for

substitute commodities; and future price expectations. Storage costs and transportation costs

are generally considered the principle factors affecting basis.



USING BASIS

An understanding of basis is necessary to determine the expected local effective price

when using futures markets to manage market risk. The basis is used to translate a futures

price to the approximate selling price established by a market strategy. The following example

illustrates how the basis is used to determine the expected final market price established by

hedging in the futures market.








3











Example

Cash Market Futures Market Basis

January 31 sell July contract

expected price: July futures price: expected basis:
$3.40/bu $3.60/bu $0.20 under
($3.60 $0.20)



July 1 buy July contract

sell wheat: July futures price: actual basis:
$3.00/bu $3.25/bu $0.25 under
($3.00- $3.25)

Hedging Summary 1
expected market price $3.40/bushel
change in basis ($0.20 $0.25) -$0.05
net return $3.35/bushel


Hedging Summary 2
cash price received $3.00/bushel
gain/loss in futures ($3.60 $3.25) $0.35
net return $3.35/bushel


The hedge allows the producer to establish a range of expected market prices,

dependent only upon the difference between the expected basis and the actual basis at

harvest. If the basis remains constant, the final price received equals the initial expected

market price of $3.40/bushel. Any basis movement from the original expected basis is added

to or subtracted from the expected market price to determine the net return (Hedging

Summary 1). The net return to the producer can also be calculated by adding the gain/loss

in the futures market to the cash price received from selling wheat in the local market

(Hedging Summary 2). Brokerage or handling charges must also be deducted to determine




4









net returns. In this example, brokerage charges of 2 cents per bushel would reduce the net

return to $3.33 per bushel.

This example illustrates how a change in basis affects the final price received by the

producer. The deviation of the actual basis in July from its expected value in the previous

January accounts for the market risk the wheat producer faces. However, in this example,

basis movement (-$0.05) is significantly less than cash price movement (-$0.40). Relying on

cash market sales alone is risky since downward cash price movements may be large and

unpredictable. With hedging, price risk lies solely with basis movement and is no longer

dependent on the variability in the cash market. Since basis risk is significantly smaller than

cash price risk, hedging is an effective risk management tool for producers. In the example,

the producer was able to set a market price subject only to the variation in basis. Note that

the actual basis might have been smaller than expected as well. In that case, a positive

change in basis would have been added to the expected market price, resulting in a higher

expected net return.



BASIS TABLES AND GRAPHS

The remainder of this publication contains tables and graphs of historical wheat basis

for Campbellton, Florida. There are two tables listing wheat basis for Campbellton from

January 1982 through December 1989. Table 1 contains weekly and average weekly basis

for July harvest contracts. Table 2 contains weekly basis and average weekly basis for

current nearby futures contracts. The basis figures in each table are calculated from Tuesday

futures prices from the Chicago Board of Trade as published in the Wednesday issue of The

Wall Street Journal and actual prices received by farmers in Campbellton. Basis is reported

in cents. Historical cash prices for the 8-year period are graphed in Figure 1. The historical


5











basis for the July harvest contract is graphed in Figure 2. Note that in Figure 2, the basis

shows a fairly cyclical pattern of strengthening early in each year, then peaking right before

harvest, and weakening after harvest. Strengthening occurs as cash prices rise within the

crop year and peak near harvest. After harvest, cash prices fall in response to new production

entering the market and the basis weakens accordingly. The current contract basis is graphed

in Figure 3. The current contract basis is less variable than the harvest contract basis, as can

be shown by comparing Figure 2 and Figure 3.

The average basis is calculated as the difference between average cash prices and

average futures contract prices in Figure 4 and Figure 5. The basis units are on the right-hand

axis. The 8-year average weekly basis for harvest and current futures contracts is graphed

in Figure 6 and Figure 7, respectively. One standard deviation around the average basis is

included to show basis variability. In other words, 66 percent of the time the basis will fall

within the range presented in the figures.

The graph in Figure 6 illustrates how basis narrows as harvest approaches, reflecting

only costs of transportation. The basis begins to widen after harvest as it reflects storage and

interest costs for the following year. The basis then narrows at harvest as does its variability.

The wheat basis shown in Figure 6 falls most often within a 20 cent range at harvest;

between 25 cents and 45 cents under the futures price.

The difference between basis risk and cash price risk is illustrated in Figure 8. The

basis is shown in the top half of the graph and its units appear on the right-hand axis. Cash

prices are shown in the bottom half of the graph, with units on the left-hand axis. Basis

variability for the harvest futures contract is approximately 40 cents, narrowing to 20 cents

at harvest. However, cash prices may vary as much as $1.00.




6









SUMMARY

The basis is the difference between local cash prices and futures contract prices at a

specific point in time. Storage and transportation costs are the primary factors affecting

basis, although other economic forces may also influence basis. Basis also reflects seasonal

cash price changes. This seasonality can be seen as the basis narrows around harvest and

widens afterwards. Fluctuations in local cash prices are risky for producers who sell

commodities in the cash market. An understanding of basis allows producers to effectively

utilize marketing strategies that minimize downside cash price risk. Hedging is one tool that

reduces the risk of adverse cash price movements. When a wheat producer hedges on the

futures market, the final price received depends upon changes in the basis. Thus, basis

becomes the bottom-line determinant of the price received by farmers when they use risk

management marketing strategies in the futures market.



























7













USEFUL REFERENCES ON BASIS AND COMMODITY FUTURES



Chicago Board of Trade. Commodity Marketing: Hedgina. Basis. Marketing Alternatives.
1982.

Chicago Board of Trade. Options On Agricultural Futures: A Home Study Course. 1984.

Chicago Board of Trade. Options On Soybean Futures: Fundamentals. Pricing, and
Applications. 1984.





































8










Table 1 Harvest Contract Basis (cents)
Campbelfton, Florida

Week 1982 1983 1984 1985 1986 1987 1988 1989 Average
J 1 -79.75 -55.50 -35.00 -32.75 -29.75 -7.50 -35.25 -44.75 -40.03
2 -80.50 -64.25 -35.50 -29.25 -43.75 -9.50 -35.25 -45.25 -42.91
3 -80.00 -60.25 -35.25 -29.75 -30.25 -10.25 -25.00 -46.50 -39.66
4 -78.75 60.00 -34.50 -29.75 -29.50 -10.75 -25.50 -44.75 -39.19
5 -79.75 -60.25 -34.50 -30.25 -30.25 -20.75 -30.25 -38.00 -40.50
F 6 -80.00 -55.25 -35.25 -30.75 -30.75 -17.25 -30.50 -41.25 -40.13
7 -76.50 -55.00 -35.25 -32.00 -30.25 -21.00 -31.00 -45.50 -40.81
8 -79.25 -54.50 -35.50 -30.00 -29.50 -10.50 -30.25 -45.75 -39.41
9 -79.75 -47.25 -30.25 -30.25 -30.50 -19.75 -35.50 -45.25 -39.81
M 10 -88.50 -55.25 -24.75 -30.25 -25.00 -20.50 -34.75 -51.75 -41.34
11 -78.75 -55.50 -25.25 -30.25 -25.00 -18.50 -36.25 -45.00 -39.31
12 -79.00 -48.75 -24.75 -29.75 -25.00 -19.75 -35.00 -44.75 -38.34
13 -79.75 -50.25 -25.25 -30.25 -24.25 -20.00 -34.75 -46.75 -38.91
14 -78.75 -51.75 -25.25 -30.00 -24.00 -20.25 -35.75 -41.25 -38.38
A 15 -84.50 -60.75 -25.25 -30.50 -24.25 -25.50 -35.25 -45.00 -41.38
16 -85.00 -77.25 -25.00 -30.50 -25.75 -20.25 -35.00 -44.25 -42.88
17 -70.50 -50.00 -24.75 -27.00 -25.50 -19.75 -34.50 -45.00 -37.13
18 -77.25 -50.25 -24.75 -30.00 -20.00 -19.75 -35.00 -47.50 -38.06
M 19 -74.50 -49.00 -25.50 -34.75 -4.75 -24.00 -30.25 -32.00 -34.34
20 -80.25 -45.25 -25.25 -24.50 -4.50 -22.50 -29.75 -26.75 -32.34
21 -64.25 -40.00 -19.75 -35.00 -19.50 -21.75 -35.50 -36.00 -33.97
22 -62.75 -40.25 -29.75 -34.75 -14.25 -30.25 -34.50 -33.00 -34.94
23 -59.25 -30.00 -35.25 -35.25 -15.00 -25.25 -45.00 -33.25 -34.78
J 24 -54.75 -30.00 -34.50 -40.00 -19.75 -30.25 -45.00 -44.25 -37.31
25 -54.50 -30.25 -35.50 -39.50 -20.75 -29.75 -50.50 -37.75 -37.31
26 -84.25 -25.75 -30.25 -40.25 -24.50 -30.25 -92.50 -44.50 -46.53
27 -39.50 -25.25 -30.50 -39.75 -25.50 -32.50 -46.00 -29.50 -33.56
J 28 -52.25 -30.25 -35.50 -39.75 -40.50 -33.50 -39.25 -34.75 -38.22
29 -53.75 -32.00 -32.50 -40.25 -30.00 -32.00 -50.00 -46.50 -39.63
30 -69,75 -55.50 -41.25 -18.50 -6.75 -54.50 -27.00 -11.50 -35.59
31 -69.50 -45.50 -40.50 -14.75 -36.00 -47.50 -37.00 -26.75 -39.69
A 32 -69.75 -52.00 -39.50 -23.00 -21.75 -53.00 -36.50 -20.00 -39.44
33 -70.25 -57.50 -39.75 -27.00 -17.25 -48.00 -50.50 -23.75 -41.75
34 -70.25 -66.75 -40.25 -30.00 -31.50 -46.50 -40.50 -28.75 -44.31
35 -70.00 -78.50 -40.00 -32.00 -31.50 -37.50 -19.00 -26.00 -41.81
S 36 -70.25 -70.00 -40.00 -35.00 -30.50 -36.50 -50.25 -21.50 -44.25
37 -54.50 -79.50 -39.75 -38.00 -20.25 -39.75 -54.00 -44.75 -46.31
38 -70.00 -44.50 -40.00 -34.75 -20.25 -34.50 -56.00 -43.75 -42.97
39 -69.25 -58.75 -39.75 -29.50 -18.50 -39.75 -51.50 -48.50 -44.44
0 40 -70.00 -62.00 -40.25 -29.50 -20.75 -42.50 -50.00 -52.75 -45.97
41 -67.50 -50.50 -40.50 -30.00 -19.75 -42.00 -50.00 -45.00 -43.16
42 -68.25 -40.50 -39.75 -29.75 -19.75 -49.50 -39.50 -44.25 -41.41
43 -60.00 -40.25 -40.25 -31.50 -20.00 -48.00 -39.25 -47.25 -40.81
44 -65.50 -40.00 -40.25 -29.00 -20.00 -30,00 -40.50 -45.50 -38.84
N 45 -58.25 -39.75 -35.00 -30.00 -18.00 -38.25 -37.75 -47.25 .38.03
46 -60.00 -40.00 -27.25 -30.00 -19.75 -38.00 -35.00 -44.25 -36.78
47 -58.00 -39.75 -30.25 -29.75 -9.75 -34.75 -34.75 -34.50 -33.94
48 -60.00 -40.25 -29.75 -30.00 -9.75 -33.75 -35.25 -37.00 -34.47
D 49 -60.00 -30.25 -29.75 -30.50 -9.75 -35.25 -34.75 -36.00 -33.28
50 -54.00 -35.25 -29.75 -29.50 -8.00 -30.75 -39.75 -36.50 -32.94
51 -62.50 -34.75 -30.25 -30.00 -6.75 -29.00 -43.25 -36.25 -34.09
52 -59.25 -35.25 -30.50 -29.25 -11.50 -35.25 -45.00 -33.00 -34.88
53* -26.50
* Extra Tuesdays in these years.


9












Table 2 Current Contract Basis (cents)
Campbelton, Florida

Week 1982 1983 1984 1985 1986 1987 1988 1989 Average
J 1 -66.00 -42.00 -49.00 -45.25 -83.25 -36.25 -46.00 -88.25 -57.00
2 -67.50 -51.50 -52.25 -40.50 -97.50 -44.25 -45.00 -94.75 -1.66
3 -64.75 -47.25 -48.00 -48.75 -80.75 -45.00 -34.25 -84.75 -56.69
4 -58.50 -40.75 -38.75 -45.50 -86.25 -47.00 -37.00 -78.75 -54.06
5 -55.50 -45.25 -30.75 -46.00 -86.25 -55.25 -41.75 -67.25 -53.50
F 6 -54.50 -40.75 -38.00 -49.75 -95.75 -45.25 -36.00 -62.25 -52.78
7 -52.25 -85.25 -35.25 -50.50 -107.00 -48.75 -29.00 -61.50 -58.69
8 -54.75 -32.00 -42.00 -45.75 -110.25 -29.50 -18.50 -71.00 -50.47
9 -61.75 -22.75 -31.75 -50.50 -117.25 -47.75 -23.00 -75.25 -53.75
M 10 -71.50 -32.00 -31.50 -51.25 -116.00 -52.75 -20.75 -76.00 -56.47
11 -60.00 -34.75 -33.25 -49.25 -124.00 -51.75 -23.00 -59.50 -54.44
12 -72.25 -31.00 -37.75 -60.00 -86.75 -40.25 -20.00 -59.00 -50.88
13 -73.50 -40.00 -40.50 -50.75 -76.75 -35.50 -28.00 -69.75 -51.84
14 -70.75 -43.25 -43.75 -52.00 -64.50 -35.75 -25.50 -51.25 -48.34
A 15 -72.50 -50.00 -40.25 -59.75 -61.25 -41.75 -26.25 -57.00 -51.09
16 -73.50 -66.00 -43.25 -59.75 -54.25 -30.50 -26.25 -52.00 -50.69
17 -56.75 -37.50 -37.25 -43.50 -60.00 -34.50 -25.00 -55.50 -43.75
18 -60.50 -43.00 -38.25 -52.00 -74.50 -32.00 -24.75 -61.50 -48.31
M 19 -59.50 -40.50 -49.00 -49.25 -62.00 -38.50 -20.50 -44.00 -45.41
20 -68.00 -37.00 -42.00 -45.25 -104.00 -28.50 -22.00 -35.50 -47.78
21 -64.25 -40.00 -19.75 -39.75 -17.50 -21.75 -35.50 -36.00 -34.31
22 -62.75 -40.25 -29.75 -34.75 -14.25 -30.25 -34.50 -33.00 -34.94
23 -59.25 -30.00 -35.25 -35.25 -15.00 -25.25 -45.00 -33.25 -34.78
J 24 -54.75 -30.00 -34.50 -40.00 -19.75 -30.25 -45.00 -44.25 -37.31
25 -54.50 -30.25 -35.50 -39.50 -20.75 -29.75 -50.50 -37.75 -37.31
26 -84.25 -25.75 -30.25 -40.25 -24.50 -30.25 -92.50 -44.50 -46.53
27 -39.50 -25.25 -30.50 -39.75 -25.50 -32.50 -46.00 -29.50 -33.56
J 28 -52.25 -30.25 -35.50 -39.75 -40.50 -33.50 -39.25 -34.75 -38.22
29 -53.75 -32.00 -32.50 -40.25 -30.00 -32.00 -50.00 -46.50 -39.63
30 -24.25 -41.75 -30.75 -40.00 -31.50 -46.25 -51.75 -43.25 -38.69
31 -21.25 -42.00 -25.25 -39.50 -57.50 -40.00 -60.50 -55.75 -42.72
A 32 -22.75 -42.50 -23.25 -40.50 -38.25 -39.75 -65.25 -49.50 -40.22
33 -24.25 -41.50 -26.25 -40.25 -35.75 -38.75 -84.50 -53.25 -43.06
34 -27.25 -41.75 -31.00 -38.25 -40.25 -39.50 -80.00 -50.50 -43.56
35 -19.00 -42.00 -34.25 -38.00 -46.50 -42.00 -51.50 -46.50 -39.97
S 36 -22.75 -41.50 -37.50 -40.75 -46.25 -40.25 -85.50 -45.25 -44.97
"37 -2.00 -41.50 -42.50 -38.00 -51,00 -39.50 -90.00 -50.50 -44.38
38 -18.50 -14.00 -41.25 -34.00 -48.25 -51.75 -89.50 -37.75 -41.88
39 -38.25 -36.00 -50.75 -46.25 -48,25 -56.00 -102.75 -46.75 -53.13
0 40 -37.25 -49.50 -48.50 -43.50 -48.75 -53.25 -109.50 -56.25 -55.81
41 -36.25 -47.50 -48.00 -47.50 -57.00 -5700 -112.25 -55.25 -57.59
42 -35.00 -42.50 -47.25 -49.50 -63.75 -55.75 -91.00 -35.25 -52.50
43 -33.50 -46.25 -55.75 -61.25 -64.50 -53.75 -80.50 -26.75 -52.78
44 -49.25 -43.25 -57.75 -56.50 -66.75 -31.25 -80.50 -49.25 -54.31
N 45 -36.25 -40.75 -53.50 -62.00 -53.50 -37.25 -83.25 -46.00 -51.56
46 -38.50 -38.75 -39.25 -9.75 -59.50 -39.25 -64.75 -25.50 -46.91
47 -37.00 -31.25 -47.75 -88.75 -25.75 -42.00 -70.00 -28.00 -46.31
48 -31.75 -37.75 -46.75 -73.50 -50.75 -38.00 -76.50 -38.50 -49.19
D 49 -29.75 -32.25 -41.75 -85.25 -42.00 -43.50 -76.00 -32.50 -47.88
50 -25.00 -36.00 -41.25 -78.50 -43.75 -40.00 -80.00 -40.00 -48.06
51 -53.25 -38.75 -46.75 -84.50 -38.75 -38.50 -84.50 -46.00 -53.88
52 -46.25 -51.75 -44.50 -78.75 -41.25 -46.00 -87.25 -41.25 -54.63
53* -82.25
Extra Tuesdays in these years.


10


















FIGURE 1 CASH PRICES
1982-1989 CAMPBELLTON, FL
$4.00

$3.80-

$3.60-

$3.40-

8 $3.20-

n $3.00-
r-
I $2.80-

$2.60-

$2.40-

$2.20-

$2.00
82 83 84 85 86 87 88 89
Year








11



















FIGURE 2 HARVEST CONTRACT BASIS
1982-1989 CAMPBELLTON, FL
0-

-10-

-20-

-30-3

S-40-

. -50"

z -60-

-70-

-80-

-90-

-100-
82 83 84 85 86 87 88 89
Year








12


















FIGURE 3 CURRENT CONTRACT BASIS
1982-1989 CAMPBELLTON, FL
0


-20-


-40-


-60-


-80-


-100-


-120-


-140
82 83 84 85 86 87 88 89
Year








13


















FIGURE 4 AVERAGE BASIS CALCULATION
HARVEST CONTRACTS
$3.60- 5
Futures -
$3.40- --5

$3.20
--15 u
Cash C
S $ 3 .0 0 .... ...-.. .... ......
S.......... ........ ...........
......." ........... . / . --25 u)
$2.80- m
-- 35


V$2.0 --45 "
$2.40 -65

$2.20. --55

$ 2 .00 , , , , , , , ,, , , , , , , , , ,, ,, -6 5
J F M A M J J A S O N D
Month


Harvest Avg. ....--.. Avg. Price Avg. Basis








14

















FIGURE 5 AVERAGE BASIS CALCULATION
CURRENT CONTRACTS
$3.60- 5

$3.40 Futur--5
$3.40- -----\^-&"----t-------/^V^t~-c-=-------

$3.20
-15 j:

u $3.00 .. \ ...... ..
.............. .. ..
S... ... / -25
S$2.80
a, -35
" $2.60-




$2.20- --5
,,o-----^-----V4----4


$2.00 ,, , ,, , ,, , ,, , ,, ,,, --65
J F M A M J J A S O N D
Month


Current Avg. -....... Avg. Price Avg. Basis








15


















FIGURE 6 HARVEST CONTRACT AVERAGE
1982-1989 CAMPBELLTON, FL
-10-

A N




*c. \\ i
C."' ..40..





-750







-80 iI I I I I
J F ... A M J J A 0 N D
Month

Average -60- .... + Std. Dev . ......- Std. Dev.








16
J F M A M J J A S O N D
Month

-- Average -.-......-. + Std. Dev. .-......... Std. Dev.








16
















FIGURE 7 CURRENT CONTRACT AVERAGE
1982-1989 CAMPBELLTON, FL
-20 A / \
-" "_ \'
3--0- *




I.. .', i, /^



-50-
c\








-80- -"-------
F ,






Month
-6 i ,, ..











Average + Std. Dev. ----- Std. Dev.







17
\- .., ,,. J J A S
-80 ,,h
',:ag "l- \ St.Dv :---- -t.D



:i v '.



















FIGURE 8 PRICE AND BASIS VARIABILITY
1982-1989 CAMPBELLTON, FL
$4.50- 0

$4.30- --20
$4.10- ...---..--------- --40

$3.90- ------"^---'>- --60 "
4--
) $3.70- --80
"00
$3.50- --100 .-
cc
"$3.30- --120

S$3.10- --140 ,
$2.90-~ .......................................... ,'". ........ '. ............... ".--160 "
$2.90- ....... .. .. ..... .. --160 I- o

$2.70- --180

$2.50- ."--.....- ......__-200
-220
$2.30- 1 i i 1 1 1 1 1 1 1 1 I i i i i i1 i i I 1 1 i 1 1 -220
J F M A M J J A S O N D
Month

............ Avg. Price + Std. Dev. Std. Dev.
Avg. Basis + Std. Dev. Std. Dev.








18