Grain and Commodity Market Glossary: Basis, Crush, WASDE and More

Plain-English definitions of the market terms used in The Daily Board, listed alphabetically.

Prices and units referred to here are explained in more detail on the About page.

The gap between your local cash bid and the futures price, usually quoted as cash minus futures. A wide basis means the local bid is well below futures. Basis moves with local supply, demand, freight and storage, so it can change even when futures do not.

The supply of a crop left over at the end of a marketing year. A tighter carryover generally supports prices, and a larger one generally weighs on them.

The price a buyer such as an elevator, crusher or feedlot offers for physical grain delivered to them. Cash bids are built from the futures price plus or minus basis.

The margin a processor earns by turning soybeans into soybean meal and soybean oil. The board crush works that margin out from futures prices for beans, meal and oil. Canola has a similar crush for its meal and oil.

Grain futures trade in fractions of a cent. In The Board, a change shown as +4'2 means four and two-eighths cents, or 4.25 cents.

The net long or short position held by speculative funds, reported weekly in the CFTC Commitments of Traders. A market with funds heavily short can rally sharply if news turns supportive, because those shorts may need to buy back.

The nearest futures contract that is actively traded. Quoted prices usually refer to it, and the contract month is labelled because the front month rolls forward as contracts expire.

The price of gold divided by the price of silver, showing how many ounces of silver it takes to buy one ounce of gold. A widening ratio means silver is underperforming gold.

Using futures or options to lock in or protect a price on grain you will sell or buy later. A hedge reduces price risk, but it does not remove basis risk.

Henry Hub, in Louisiana, is the delivery point for the benchmark US natural gas futures contract. MMBtu stands for one million British thermal units, the unit natural gas is priced in.

HRS is hard red spring wheat, traded in Minneapolis (MW). HRW is hard red winter wheat, traded in Kansas City (KE). SRW is soft red winter wheat, traded in Chicago (ZW). The hard wheats are higher in protein and used for bread flour, and soft red wheat is lower in protein and used for cakes, cookies and crackers.

The Canadian dollar. Canola and Alberta feed barley are priced in Canadian dollars per tonne, so a stronger loonie can pull Canadian prices lower even when US markets are flat.

How much of the value of a soybean crush comes from meal compared with oil. When oil rallies and meal falls, the split is moving toward oil.

The official end-of-day price an exchange sets for a futures contract, based on trading near the close. Daily changes are measured from one settlement to the next, which can differ from the last trade of the day.

The price difference between two related contracts or markets, such as HRW minus SRW wheat, or one delivery month against another. Spreads show how the market is valuing quality, location or timing.

The World Agricultural Supply and Demand Estimates report, published monthly by the US Department of Agriculture. It updates forecasts for production, use and ending stocks and often moves grain and oilseed prices on release day.

West Texas Intermediate, the benchmark US crude oil traded on NYMEX (CL) and priced in US dollars per barrel. Crude feeds through to farm diesel costs, and to soybean oil through biofuel demand.

See how these terms show up in practice in the edition archive, or follow a market: Wheat, Canola, Soybeans and Corn.