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Better Farming
February 2017
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BETTER
BUSINESS
Advantage Farm Equipment Wyoming, 519-845-3346 Anderson Equipment Sales Belleville, 613-969-6246 Picton, 613-476-6597 Ben Berg Farm & Industrial Equipment Wainfleet, 905-899-3405 Brant Tractor Brantford, 519-449-2500 Callaghan Farm Supply Lindsay, 705-324-8686 Church’s Farm Supplies Barrie, 705-458-0870 D & S Downham Stratford, 519-273-1740 DeBoer’s Equipment Elora, 519-846-5388 Hyde Park Equipment Ltd. London, 519-471-1400 Norfolk Tractor Co. Ltd. Simcoe, 519-426-1090 Roberts Farm & Recreation Chesley, 519-363-3192 Lucknow, 519-529-7995 Mount Forest, 519-323-2755 Ross Doble Inc. Sunderland, 705-357-3123 Stewart’s Farm Equipment Erin, 519-833-9616 Topline Trailers & Equipment Winchester, 613-774-0994 Tracks & Wheels North Bay, 705-840-5438 Sudbury, 705-566-5438 Timmins, 705-268-5438 Durham Kubota Oshawa, 905-655-3291 Earth Power Tractor & Equipment Meaford, 519-538-1660 Owen Sound, 519-376-5880 Stayner, 705-428-3132 Hartington Equipment Hartington, 613-372-2744 Perth, 613-264-0485 Hyde Brothers Farm Equipment Hensall, 519-263-2605 Exceptional comfort and an easy to maintain Kubota Tier IV Diesel engine combine for an impressive piece of equipment in Kubota’s SSV Series. New side lights expand the operator’s visibility on the job site, and the roll up door and wide operator area make for a more alert and productive work environment during those long cold jobs. All of a sudden, winter doesn’t seem so bad. TOUGH WINTER AHEAD? WE WOULDN’T HAVE IT ANY OTHER WAY. kubota.ca | On the SSV Series. *See your dealer for complete details.“Basis is derived from the net
price (or cash price) plus or minus
the commodity futures,” said Moyse.
Backx further explained the
factors that influence basis.
“The further you are from Chica-
go (for corn sales) will result in a
(less attractive) basis at your location
– freight rates are a major compo-
nent,” said Backx.
The basis is normally decreased in
value at harvest time, when there is
ample supply available, according to
Backx. Likewise, basis typically
increases in value through the
storage season, as farmers are not
necessarily supplying end users with
what they demand.
“Sometimes an end user (like a
grain elevator/terminal) may need to
get coverage for a short-term order,
such as filling the last of a boat for
export,” he said. “This can cause a
short-term spike in basis” to attract
sellers.
To Kell, another key component
to keep in mind with regard to basis
is the exchange rate.
“Because the futures portion of
the price is in U.S. dollars, and the
cash transaction with a Canadian
farmer is typically in Canadian
dollars, the basis portion of the price
also includes the currency exchange
component of the price,” said Kell.
“Most of the changes in basis
which Canadian farmers see in the
marketplace are due to changes in
the exchange rate.” This is because
the other components of basis do not
typically change from day to day, or
even week to week, said Kell.
Backx said the exchange rate is the
most volatile part of basis for
Ontario producers.
“To correctly predict basis in
Ontario, you need to (largely)
predict the CAD (Canadian dollar)
direction – this is nearly impossible,”
he said.
Basis contracts
A basis contract differs greatly from
a flat price contract and should be
managed accordingly, these industry
representatives say.
With a basis contract, farmers can
lock in a basis while hopefully