How to Use Basis in Hedging

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How to Use Basis in Hedging

Cash Price – Futures Price = Basis (at a specific point in time). A producer’s decision as to when and how to market their crops or livestock can have as big an impact on their net bottom line profit as any production decision they may make throughout the year. Farmers today have more marketing alternatives than in the past and face a complex and fast paced marketing system. They need to compare the traditional marketing methods of making cash sales at harvest (or before harvest, on guaranteed insured bushels), or when livestock are ready for market, to…

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