What is grain basis?
Basis is the gap between what your local elevator will actually pay you today and the nearby futures price on the relevant board, such as CBOT in the corn example. It captures everything local that futures cannot: transportation to the delivery point, local supply and demand, available storage, and interest rates.
| Corn | Value |
|---|---|
| Local cash price | $4.20 |
| Nearby Dec futures | $4.45 |
| Basis | -$0.25 ("25 under") |
A negative basis, or "under," means cash is below futures — normal for most grain. A positive basis, or "over," means cash is above futures.
Strong vs. weak basis
Basis is described as strengthening when cash rises toward futures and becomes less negative. Basis is described as weakening when cash falls away from futures and becomes more negative.
Local buyers want grain now and are paying up for it. The market is nudging toward selling.
Local demand is soft; buyers do not want it yet. The market is nudging toward holding or storing.
Seasonal pattern: Basis is typically weakest at harvest, when everyone is selling and bins and transport are full. It often strengthens through storage season into spring and summer. Predictable, but never absolute.
Knowing your normal basis lets you turn any futures price into an expected local cash price.
What is carry?
Where basis is about place, carry is about time. Carry, also called the carrying charge, is the spread between a deferred futures contract and the nearby one. It reflects what the futures market is offering for storing grain from now until that later month.
| Contract | Futures price | Carry vs. Dec |
|---|---|---|
| Dec corn | $4.17 | — |
| March corn | $4.25 | +$0.08 |
| May corn | $4.33 | +$0.16 |
| July corn | $4.40 | +$0.23 |
Here the market is offering 8¢/bu to carry corn from December to March.
Deferred futures are above nearby futures. Supply is ample and the market is paying for storage time.
Nearby futures are above deferred futures. Supply is tight and demand wants grain now — a signal against storing unpriced grain.
A positive carry is not a forecast that prices will be higher later. It is the futures market's payment for storage time, and it only becomes a locked-in storage return if the deferred sale or hedge is actually priced. Holding unpriced grain in the bin is speculation, not capturing carry.
Does the carry actually cover your storage cost?
Carry only pays if it beats your cost to store. There are two cost buckets to weigh against it.
In a 2024 farmdoc analysis, commercial Corn Belt storage was modeled at roughly 4¢/bu/month, excluding additional fees or in-charges. Your actual cost may differ. On-farm costs vary by drying, shrink, handling, quality loss, energy, labor, and equipment.
This is the interest or return on revenue you gave up by not selling. At a lower savings-rate assumption versus a higher operating-loan-rate assumption, the same carry can pencil to a profit or a loss.
Store when carry + expected basis gain is greater than your total storage cost. Otherwise the bin is costing you money.
Reading basis and carry together
Neither signal stands alone. Put them side by side and the store-or-sell call gets clearer. This is intelligence, not advice: the grid explains the market signals, but your cost structure and risk tolerance still make the call.
Demand is here, market will not pay to wait.
Sell cash, consider re-owning on paper.
Capture strong basis, weigh the carry.
Weak local demand now plus carry above storage cost may justify holding, especially if the deferred sale or hedge is priced.
Weak basis + carry above your storage cost
Market demand is low now. Holding may make sense if the storage math works and the deferred sale or hedge is priced.
Strong basis + low or negative carry
The market wants delivery now. Selling is usually the cleaner signal.
Track both daily
Carry can flip from positive to negative quickly on a demand swing.
Turn basis and carry into a clear read on your position.
You do not have to track this by hand. GrainIQ turns basis and carry into a clear read on your actual position. Every number is labeled by source — USDA ERS, NOAA, CBOT, or your own entry. Intelligence, not advice: GrainIQ gives you the quantitative picture so you can make the call.
Storage Profitability Calculator
Model store-vs-sell with your production cost, break-even, and bin ROI using named public defaults.
Basis & Storage — Arbitrage Intelligence
Compare carry, basis risk, and storage value, and see what each move locks in vs. leaves open.
Basis and carry questions
What is grain basis in simple terms?
Basis is your local cash price minus the nearby futures price. It shows whether local buyers want grain now, which usually appears as stronger basis, or whether demand is softer, which usually appears as weaker basis.
What does it mean when basis is "20 under"?
Your local cash price is 20¢ per bushel below the nearby futures price. That is a negative basis of -$0.20, which is typical for most grain.
What is carry in the grain market?
Carry, or carrying charge, is the price spread between a deferred futures contract and the nearby one. It reflects what the futures market is offering for storing grain over time. Positive carry means the market is paying for storage time; an inverted market signals demand for grain now.
Should I store or sell my grain?
Generally, weak basis with carry larger than your storage cost favors storing, especially if the deferred sale or hedge is priced. Strong basis with low or negative carry favors selling. The deciding factor is your own storage cost, including physical cost and opportunity cost.
Can I "capture the carry" by just holding grain in the bin?
No. You only capture carry by pricing the deferred sale or hedge. Holding unpriced grain is speculating that prices will rise, which is a separate bet from capturing the carry.
Further reading
- Post-Harvest Market Signals, Basis and Carrying Charges — UNL CropWatch
- Understanding Basis in Grain Marketing — UW-Madison Extension
- An Introduction to Basis — MU Extension
- Post-Harvest Grain Marketing in a Low-Price Environment — farmdoc daily / University of Illinois
- Knowing and Managing a Grain Basis — Texas A&M AgriLife Extension