• TABLE OF CONTENTS
HIDE
 Copyright
 Title Page
 Abstract
 Table of Contents
 List of Tables
 Introduction
 Basis terminology
 Factors affecting basis
 Using basis
 Basis tables and graphs
 Summary
 Reference
 Tables and graphs






Group Title: Economic information report - Food and Resource Economics Department - 280
Title: North Florida soybean basis, 1979-1989
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00027327/00001
 Material Information
Title: North Florida soybean basis, 1979-1989
Series Title: Economic information report
Physical Description: iii, 18 p. : ill. ; 28 cm.
Language: English
Creator: Blythe, Beth Pride
Ford, S. A ( Stephen Allyn )
Hewitt, Tim
Publisher: Food & Resource Economics Dept., Agricultural Experiment Stations and Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Publication Date: 1990
 Subjects
Subject: Soybean -- Marketing -- Florida   ( lcsh )
Soybean -- Prices -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Statement of Responsibility: Beth Pride Blythe, Steve Ford, Tim Hewitt.
General Note: Cover title.
General Note: "December 1990."
Funding: Economic information report (Gainesville, Fla.) ;
 Record Information
Bibliographic ID: UF00027327
Volume ID: VID00001
Source Institution: Marston Science Library, George A. Smathers Libraries, University of Florida
Holding Location: Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 001589300
oclc - 23111449
notis - AHL3272

Table of Contents
    Copyright
        Copyright
    Title Page
        Title Page
    Abstract
        Page i
    Table of Contents
        Page ii
    List of Tables
        Page iii
    Introduction
        Page 1
    Basis terminology
        Page 1
    Factors affecting basis
        Page 2
    Using basis
        Page 3
        Page 4
    Basis tables and graphs
        Page 5
        Page 6
    Summary
        Page 7
    Reference
        Page 8
    Tables and graphs
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
Full Text





HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida






Beth Pride Blythe
020 Steve Ford
Tim Hewitt


Economic Information
Report 280


North Florida Soybean Basis, 1979-1989


0 -" !C i


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


December 1990











North Florida Soybean Basis

1979-1989


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

basis is provided with graphical analysis.



key words: soybeans, 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.









TABLE OF CONTENTS


Page

Abstract i

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









LIST OF TABLES AND GRAPHS


Page

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









INTRODUCTION

Soybean 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 soybean basis tables and graphs calculated for Campbellton, a major

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

informe-:on about historical soybean basis.



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 November soybean contracts are

trading for $6.05 and the local cash market for soybeans in October is $5.85 per bushel, the

basis is 20 cents under the November futures price ($5.85 $6.05 = -$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 near the harvest month. For soybeans, the harvest month contract









INTRODUCTION

Soybean 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 soybean basis tables and graphs calculated for Campbellton, a major

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

informe-:on about historical soybean basis.



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 November soybean contracts are

trading for $6.05 and the local cash market for soybeans in October is $5.85 per bushel, the

basis is 20 cents under the November futures price ($5.85 $6.05 = -$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 near the harvest month. For soybeans, the harvest month contract











is typically the November contract. The current basis and the harvest basis are the same from

mid-September to mid-November.

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

strengthening. 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 prior to harvest when cash prices are high 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 soybeans from

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

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

soybeans 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.









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.










Example

Cash Market

May 31

expected price:
$6.20/bu
($6.40 $0.20)


Nov 1


sell soybeans:
$5.80/bu


Futures Market

sell Nov contract

Nov futures price:
$6.40/bu




buy Nov contract

Nov futures price:
$6.05/bu


Basis



expected basis:
$0.20 under






actual basis:
$0.25 under
($5.80 $6.05)


Hedging Summary 1
expected market price
change in basis ($0.20 $0.25)
net return


Hedqinq Summary 2
cash price received
gain/loss in futures ($6.40 $6.05)
net return


$6.20/bushel
-$0.05
$6.15/bushel



$5.80/bushel
$0.35
$6.15/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 $6.20/bushel. Any basis deviation 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 soybeans in the local market

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










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

return to $6.13 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 November from its expected value in the

previous May accounts for the market risk the soybean 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 soybean basis

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

January 1979 through December 1989. Table 1 contains weekly and average weekly basis

for November 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 11-year period are shown in Figure 1. The historical










basis for the November harvest contract is shown in Figure 2. Note that in Figure 2, the basis

shows a fairly cyclical pattern of strengthening early in each year, 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 shown in Figure 3. The current contract basis is less

variable than the harvest contract basis. This can be seen 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 11-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.

Figure 6 is an illustration of 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 soybean basis shown in Figure 6 falls most often within a 15 cent range at harvest;

between 15 cents and 30 cents under the futures price.

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

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

Average 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 $1.00, narrowing to

25 cents at harvest. However, cash prices may vary as much as $3.00.









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 soybean 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.













USEFUL REFERENCES ON BASIS AND COMMODITY FUTURES


Chicago Board of Trade. Commodity Marketing: Hedgin., 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.











Table 1 Harvest Contract Basis (cents)
Campbeltton, Florida


Week 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 2 Average


J 1
2
3
4
5
F 6
7
8
9
M 10
11
12
13
14
A 15
16
17
18
M 19
20
21
22
23
J 24
25
26
27
J 28
29
30
31
A 32
33
34
35
S 36
37
38
39
0 40
41
42
43
44
IN 45
46
47
48
10 49
50
51
52
53*


* Extra Tuesdays in these years.


-16.75
2.00
7.75
9.00
-1.75
23.75
17.25
35.25
20.25
24.50
22.00
26.25
36.50
31.00
21.75
20.75
11.25
-10.50
4.00
-3.50
0.00
.4.25
-8,50
-22.75
-27,75
-11.25
-31.50
2.00
0.50
12.75
3.50
-14.75
-6.00
-8.50
-13.00
-8.00
-23.50
-25.00
-24.75
.36,00
-34.00
-45.25
-40,00
49.75
-55.00
-49,75
41.00
-124.25
-113.00
-118.75
-119.75
-121.75


-125.00
-118.25
-10825
-113.75
-113.75
-109.25
-115.75
-121.00
-109.75
-109.25
-105.50
-98.75
-97.75
-94.50
-95.25
-99.50
-96.25
88.00
-87.25
-81.25
-70.25
-65.75
-74.25
-75.75
-75.75
.77.50
-79.50
-76.00
-67.00
-67.50
-80.75
-67.50
-59.00
-57.50
-40.00
-40.50
-39.50
-39.50
40.00
-40.00
-25.50
,40.00
-40.00
-40.50
-40.25
-22.75
.48.50
-6.00
-34.00
.97.50
-79.50
-70.50
.78.00


-66.50 -74.00 -44.75 54.50 -53.25 -9.25 -11.25
-90.50 -66.75 -53.25 4850 -29.25 4.25 4.00
-99.75 .64.75 -61.50 26.25 -36.25 -9,50 0.75
-116.50 -67.75 -72.75 7.00 -26.25 -5.75 6.75
-93.75 -80.00 -78.75 -10.25 -24.25 -6.00 -1.25
-107.50 -0.75 -79.25 -8.25 -29.75 -2.25 7.25
-107.50 -76.50 -72,00 -18.00 -34.00 2.75 10.75
-110.25 -75.00 -76.00 19.75 -37.50 0.75 32.75
.103.00 -72.75 -76.50 31.00 -35,25 10.25 -025
-102.50 -55.75 -75.25 21.50 -27.00 1.00 4.00
-94.50 -53.75 -64.25 53.25 -23.75 0.75 4.00
-94.00 -45.25 -45.50 56.25 -20.00 9.00 4.75
-99,00 -42.25 67.75 39.50 -8.00 -0.25 0,00
-104.25 -41.00 -72.75 44.50 -9.50 -0.75 -9.75
-98.00 -46.25 -71.75 53.50 -13.75 0.25 -11.00
-96.00 -46.25 -74.75 42.75 -17.25 3.50 -7.75
-73.50 -47.25 -61.75 53.75 -14.25 4.25 -5.50
-92.25 -42.25 -62.25 59.75 -24.25 -7.75 -12.25
-72.25 -37.25 -54.50 104.75 -17.75 -10.75 -32.50
-48.50 -38.25 45.00 113,25 -14.00 4.75 -39.50
-49.00 -35.50 -43.25 144.00 -13.25 10.25 -30.50
-50.75 -27.75 -38.75 121.50 -8.75 11.25 -31.50
-55.50 -45.75 -44.00 95.25 5.75 13.75 -33.50
-60.50 -4200 -42,50 75.50 4.50 12.75 47.00
-76.50 -37.50 -39.50 33.00 11.50 13.50 -41.75
-79.00 -36.00 -31.25 17.50 -2.50 9.00 -38.50
-76.75 -20.50 -3600 15.25 -375 11.75 -27.50
-64.75 -16.00 -37,50 9.00 3.00 14.50 -28.50
-54.25 -7.00 -18.50 54.00 -7.50 14.50 -27.00
-57.00 -5.50 -38.50 10.00 0.00 13.50 -35.50
-52.50 -5.50 -3550 -9.00 -5.00 24,50 -24.50
-35.50 -3.50 -39.50 2.00 -2.75 -31.75 -22.00
-38.25 -8.50 -40.00 14.50 -10.00 -4.25 -19.25
32.75 -7.75 -35.00 -10.25 -9.00 5.25 -22.00
-26.25 4.50 -45.75 -9.50 0.25 -5.00 -20.25
-24.50 6.75 -34.50 -12.75 0.00 1.50 -26.50
-25.00 5.00 -34.50 -17.25 0.25 4.75 -19.00
-3475 -9.00 -3500 -32.50 -0.25 -20.50 -27.00
44.50 -22.25 -34.50 -4.50 -5.00 -5.50 -24.00
-44.25 -34.50 -35.00 -13.00 -18.50 -19.50 -9.75
-44.75 -34.75 -2500 -11.50 -14.00 -15.25 -18,50
-45,00 -3525 -24.50 -14.75 -14.50 -9.50 -36.00
-50.25 -29.50 -20.00 -14.25 -15.25 -9.75 -13.75
-44.75 -22.50 -15.00 -11.75 -10.25 -10.75 -11.25
-45.25 -23.25 -7.50 -17.50 -5.25 -8.25 -14,25
-38.00 -25.25 -11.00 -8.25 -5.50 -7.00 -8.50
-108.00 -51.50 52.00 -8.00 0.00 -5.25 -17.25
-96.50 -55.75 83.25 -43.25 -24.25 -2.25 -10.75
-91.50 -37.75 73.00 -43.50 -17.00 -9.50 -5.25
-77.75 -44.50 84.75 45.00 -7.00 -8.00 -18.25
-91.25 -43.25 71.00 48.75 -17.25 -3.25 -19.25
1.50 -53.50 93.50 -58.00 -23,25 -9.50 -20.50
-22.50


-25.25
-35.50
-47.50
-50,50
-19.50
-51.75
47.75
-56.00
49.25
42.50
-51.25
-42.75
-3825
-42.00
-44.50
-46.25
-45.00
-42,00
47.50
-54175
-59.50
-53.00
-48,50
45.50
-29.50
-107.00
-32.50
-22.00
-75.00
-73.00
-37.50
-40.00
-34.50
-46.50
-47,25
-35.50
-30.00
-3.00
-36.00
-30.00
-30.50
-27.50
-25.50
-24.75
-2225
-15.50
24.75
32.75
45,00
27.50
43,25
22.00


29.75
27.25
18.50
11.25
2.25
-3.75
-6.50
-6.25
-6.00
-4.50
8.00
5.50
8.00
-20.50
-2275
-17.50
11.50
-9.25
18.50
24,50
13.50
38.50
35.25
30.00
53.25
37.00
39.00
56.00
37.75
34.50
28.50
0.00
5.50
0.00
-5.50
2.50
-29.50
-35.50
-29.25
-43.25
-30.25
-43.50
.27.75
-22.50
-25.25
-19.00
-54,50
-58.00
-6225
-59,75
-63.50
-6625


-31.07
-28.91
-34.02
38.11
-38.82
-40.14
.40.66
-35.77
-35.57
-33.25
-27.73
-22.23
-24.48
-29.05
-29.80
-3075
-24.66
-30.09
-21.14
-16.57
-12.14
-9,93
.14.55
-19.39
-19.73
-29.05
-22,00
-14.57
-13.59
-18.75
-17.61
-23.20
.18.16
-20,18
-18.89
-15.59
-18.93
-26.27
-24.57
-28.05
-25.82
30.52
-26.00
-23.98
-24.00
-19,14
-23.39
-27173
-26.89
-33.11
-33.77
-35.39


-----: .....












Table 2 Current Contract Basis (cents)
Campbetton, Florida

Week 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989


J 1
2
3
4
5
F 6
7
8
9
M 10
11
12
13
14
A 15
16
17
18
M 19
20
21
22
23
J 24
25
26
27
J 28
29
30
31
A 32
33
34
35
S 36
37
38
39
0 40
41
42
43
44
N 45
46
47
48
D 49
50
51
52
53*


SExtra Tuesdays in these years.


-26.50
-12.25
.14.75
-19.75
-25.00
-19.25
-25.25
-2500
-24.75
-24.50
-9.50
-18.00
-25.00
-19.50
-19.50
-19.50
-20.00
-17.25
1.75
0.75
-15.00
-14.75
-14.75
-15.00
-21.00
-19.50
-26.50
1.75
-7.00
0.00
0.50
-9.50
-10.25
-11.00
-14.25
-9.25
-20.00
-27.50
-24.75
-36.00
-34.00
-45.25
-40.00
-49.75
-55.00
-49.75
-41.00
-54.50
-40.75
-39.50
-40.50
-40.50


-- --


q i ..... .. I III I ......... .. I


I


-39.50 -27.00
-28.00 -27.50
-28.75 -20.50
-34.50 -67.25
.45.00 -29.50
-45.00 -30,00
-44.50 .30.00
-44.50 -32.75
-34.75 -20.00
-35.25 -30.50
-30.00 -22.50
-21.00 -40.00
-34.50 -45.50
-34.50 -45.00
-34.50 -39.50
-39.75 -39.50
-35.25 -21.50
-34.75 -35,75
-35.25 -23.25
-36.50 -10.00
-27.00 -35.25
-39.75 -35.00
-44.50 34.50
-44.75 -34.50
-44.50 -40.25
-45.00 -34.50
45.00 -35.25
-44.75 -27.25
-43.00 -23.50
-60.00 -25.25
-55.50 -24.50
-44.50 -26.50
-33.00 -26.00
-37.00 -21.50
-19.75 -20.25
-19.50 -21.00
-9.00 -19.50
-21.50 -34.75
-40.00 -44.50
-4.00 -44.25
-25.50 -44.75
-40.00 -45.00
-40.00 -50.25
-40.50 -44.75
-40.25 -45.25
-22.75 -38.00
48.50 -50.00
-51.00 49.50
-60.00 -45.50
-67.00 -40.25
-49.50 -44.75
-45.00 -34.00
-31.25


-30.00 -21.75
-26.25 -24.00
-24.50 -25.25
-29.50 -36.50
-34.50 -3.50
-30.00 -35.75
-29.50 -30.25
-29.50 -31.75
-23.25 -28.25
-23.00 -32.00
-23.50 -23.75
-30.00 1.75
-25.25 -28.50
-24.50 -29.50
-25.25 -29.50
-25.00 -35.25
.20.25 -20.00
-19.75 -20.25
-22.25 -14.50
-21.75 -10.50
-23.00 -23.00
-16.25 -22.50
-30.25 -23.00
-30.00 -23.25
-29.50 -18.75
-19.50 -12.50
-13.50 -7.25
-15.50 -8.25
-4.50 12.00
-4.50 -12 5
4.75 -12.75
-4.75 -16.00
-8.00 -22.00
-0.25 -18.50
10.25 -30.00
10.50 -22.25
13.00 -29.00
1.75 -27.00
-22.25 -34.50
-34.50 -35.00
-34.75 -2500
-35.25 -24.50
-29.50 -20.00
-22.50 -15.00
-23.25 -7.50
-25.25 -11.00
-29.50 -3250
-29.50 -25.00
-20.25 -25.00
-19.75 -11.00
-19.75 -19,50
-25.25 -1000


-24.50
1.50
3.50
-24.75
-9.75
-14.75
-9.50
16.25
12.25
-3.25
6,00
-9.00
-15,00
-14.50
-14.75
-1475
-24.50
-6.50
4.25
-2,00
-4.75
-5.00
1.25
-4.25
-9.75
-9.50
410.00
-11.25
-18,00
-10.00
-10.25
-10,25
0.50
-10.25
-9.75
-9.75
-10,00
-27.50
-4.50
-13.00
-11,50
-14.75
-14.25
-11.75
-17.50
-8.25
-8.00
-11.75
-20,00
-19.50
-20.00
-19.75


-10.00
-0.25
-10.50
-5.75
-8.50
-12.75
-8.00
-8.00
-6.75
.11.25
-6.75
-500
-5.25
-4.25
-4.50
-5.50
0.00
-5.00
-2.75
-6.50
-5.00
-4.75
-4.50
-4.75
-5.25
-1025
-11.00
1.50
-1.00
0.00
-5.00
-5.00
-14.75
12.50
-2.75
-2.75
-1.00
-1.00
-5.00
-18.50
-14.00
-14.50
-15.25
-10.25
.5.25
-5.50
0,00
-9.00
-8.75
-9.25
-9.00
-12 25
-8,25


-9.50 -10.25
-.00 -9.25
-12.75 -8.50
-11.50 -10.50
-12.25 -17.00
-12.00 -9.75
-12.25 -12.25
-12.50 10.50
-1250 -9.75
-12.00 -9.75
-11.25 -7.00
-1225 -10.00
-16.00 -10.50
-14.75 -9.50
-17.75 -10.25
15.50 -40.25
-15.50 -9.50
-15.25 -11.50
-17.00 -1850
-1350 -20.50
-9,50 -25.00
-9.50 -25.25
-10.75 -24.75
-9.50 -26.0
-14.00 -25.75
-13175 -24.25
-21.25 -26.75
-18.00 -43.50
-25.25 -51.00
0.00 -4325
0.50 -37,75
-57.25 -40.50
-48.00 -46.25
-6.75 -2550
-5.75 -24.00
0.00 -27.75
-1,75 -1750
-2050 -25.00
-5.50 -24.00
-19.50 -9,75
-1525 -18.50
-9.50 -36,00
-9.75 -13.75
-10.75 -11.25
-8.25 -1425
-7,00 -8.50
-4.75 -24.00
-4,00 -36.00
-4,75 -23,25
-4.00 -17.50
-3.25 -20.00
-5,00 -19.50


-23,25 -39.75
-23.25 -30.50
-30,00 -20.75
-33,50 -29.50
5.00 -17.50
-24.75 -33,50
-25.50 -30.25
-26.00 -25.50
-25.00 -30.50
-14.00 -26,25
-19.75 -13,00
-9.00 -18.50
-20.25 -19.75
-19.75 -29.75
-21.25 -25.50
-20.00 -26.50
-20,50 -13.50
-20,25 -24.00
-19.75 -27.25
-2650 -24.25
-35.50 -31.50
-35.00 -46,00
-40,00 -45.00
-40.00 -43.00
-62.50 -23,25
-144.50 -55.50
-33,00 -29.50
-25.50 -19.00
-67.50 -37.50
-72.50 -29,00
-18.00 -4.50
-24.75 -28.50
-20.50 -32,50
-35.00 -10.00
-35,00 -725
-23.00 -2.25
-17.00 -46.00
-1950 -30,00
-36.00 -29.25
-30.00 -43.25
-30.50 -30.25
-27.50 -43,50
-25,50 -27.75
-24.75 -22.50
-22.25 -25.25
-15.50 -19.00
-34.75 -31.75
34.75 -33,75
-35,25 -28.00
-40.50 -23.00
-31.50 -22.50
-39.50 -21,50


Average
-23.82
-16.89
-17,52
-27,55
-21.23
-24.32
-23.39
-18.98
-18.48
-20.16
-14.64
-15.55
-22.32
-22,32
-22.02
-22.86
-18.23
-19.11
-15.86
-15.57
-21.32
-23.07
-24.61
-25.00
-26,77
-35.34
-23.55
-19,07
-24.20
-23.36
-15.64
-24.32
-23.70
-17.11
-14.41
-11.55
-1525
-21.14
-24.57
-29.43
-25,82
-30,52
-2.00
-23.98
-24.00
-19.14
-27,70
-30.80
-28.32
-2.,48
-25.48
-24,75

















FIGURE 1 CASH PRICES
1979-1989 CAMPBELLTON, FL
$10.00

$9.50-

$9.00-

$8.50

$8.00-

. $7.50-

m $7.00-
>, $6.50-
C) .


Year

















FIGURE 2 HARVEST CONTRACT BASIS
1979-1989 CAMPBELLTON, FL
120-
110-
100-
90-
80-
70-
60-
50-
40-
a) 30-
- 20-
10-

d. -10-
c -20-
W -30-
.0 -40-
o -50-
0) anVV


Year


















FIGURE 3 CURRENT CONTRACT BASIS
1979-1989 CAMPBELLTON, FL
20
10-
0
-10-
-20-
., -30-
" -40-
' -50-
., -60-
0- -70-
c -80-
> -90-
U) -100-


Year
















FIGURE 4 -


AVERAGE BASIS CALCULATION
HARVEST CONTRACTS


J
Month


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




















FIGURE 5 AVERAGE BASIS CALCULATION
CURRENT CONTRACTS


00- 40
Futures

80 ----... 30
60-
40 ~ 20
40" .. .. .
.2Cash ..... -.10
20- ..-.. .,, .,10

00- 0

80- --10
--10
60
40/- --20


20- V -30

M n n . . .... .. . . . . I I. _A n


$7.


$6.

$6.

$6.
$6.



$5.



$5.

$5.

$5.


I II I I I I I"
N D


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


l l .l l .l l l l .ll l.l I. .ll l.ll l ll l l ll l ll l g l ll
J F M A M J J A S
Month


w,

















FIGURE 6 HARVEST CONTRACT AVERAGE
1979-1989 CAMPBELLTON, FL
60

40-

20

00
5 ....... .... /
* / '.
z 0----''---'-

m

*, ,/X \ \-- i
Q 4 0 -. ..-..

S 0-0
. ... \
.,. ..0-....-----....... i'------.--Y"-'"T -_i

8 0 ........-,---


-100 II II I I II I I I I I I I I I I I I I I I I I I i i i I' I i I I I I I I I I I I i i i i i I
J F M A M J J A S O N D
Month


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


















FIGURE 7 CURRENT CONTRACT AVERAGE
1979-1989 CAMPBELLTON, FL
10


0-

-10 ...... ,, ".-.

0 ...... -\ .
t -40 :-..."-.....---- \v i,, ,*** -" ....


c -20-






CO
S50 ;f
-60-'

-70


-8 0 I 1 I I I I I I I I I I I
J F M A M J J A S O N D
Month


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


















FIGURE 8 PRICE AND BASIS VARIABILITY
1979-1989 CAMPBELLTON, FL
$11.50 100
$11.00- -50
$10.50- -0
$10.00- ----- \ -50
$9.50- --100 "
S$9.00- -150 c
. $8.50- -200
$8.00- --250 "
S $7.50- -300
, $7.00- --350 (
$6.0- ....--400
$6.00- -450
$5.50- ---500
$5.00- --550
$4.50- --600
$4.00 -650
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.




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