Five fields, one named source and one fixed hour, or the sheet is a diary. Kansas State University’s guide to the gap between a local bid and an exchange quote lists what a line has to carry, and it does not soften the list: identifying basis for a commodity requires the location, date, grade, futures contract, and the basis amount, with its plus or minus sign.
Two more fields turn that into something a second person can feed without asking you anything. One hour is fixed in advance and goes in the header; the hour each pair of numbers was actually read goes on its own line. Both raw numbers go in the sheet, so the difference can be recomputed instead of trusted.
Following the price is not recording it. It happens on the phone, in the group chat and at the counter, and none of those leaves anything behind. When the buyer calls, the figure standing in for the market is the one that stayed in your head, and nobody on the farm can say whether today’s bid is above or below what this product usually fetches at this point in the cycle, or whether the gap between the published quote and what the local buyer pays has widened or closed. Kansas State has since marked that guide archived. It stays open at the address above, and the five fields have not changed.
What has to be on every line
Seven columns, and two of them exist to make the sheet checkable by somebody other than you. The five in the Kansas State list identify the price. The hour and the local bid make the entry reproducible: without the hour, two people reading the same day disagree, and without both raw numbers, the difference in the last column can never be recomputed. Keep the sheet on one page per product. A second product gets a second sheet, because the grade line stops meaning anything the moment two products share it.
| Column | What goes in it |
|---|---|
| Date | The calendar day, four-digit year |
| Time | The hour the two numbers were read, not the hour you wrote them down |
| Location | The counter the production would actually leave through |
| Grade | The class, type or weight range being priced, in the words the buyer uses |
| Reference quote | The published figure, and which contract or series it came from, out of the one source named in the header |
| Local bid | What the buyer named in the header would pay you today |
| Difference | Local bid minus reference quote, with the plus or minus sign kept |
The sign is not decoration. Kansas State asks for it in the same line as the fields, because a figure without it flips meaning between two readers of the same sheet.
Why the header names the source, and the hour
Because the same market has more than one published number, and the institutions that publish them say so. In Argentina, the grain exchanges of Bahía Blanca, Córdoba, Chaco, Entre Ríos, Rosario and Santa Fe signed an agreement with Matba Rofex to publish one export dollar index daily on their own sites, and the reason they gave for building it is the reason your header exists: it is common to see different values depending on the website, the trader or the journalist you ask. That index is calculated on every day that is a business day in Argentina and the United States, and can be consulted from 16.15 on the Matba Rofex site. The source itself has an hour.
The other two markets publish the same kind of object. In the United States, the daily oilseed report from USDA’s Agricultural Marketing Service is stamped with the day’s date, marked as that day’s final version, and prints region and location, sale type, basis, price and delivery period as separate columns, naming the exchange whose closing settlement it used.
In Brazil, Conab states that it has systematically surveyed the prices of more than 112 farm products for over 30 years, and that the localities, trade levels and products surveyed are defined from specific public policy or from internal and external demand. None of the three is the one to follow. Which one you follow is your call. Writing it in the header is not.
One more document reaches the farm with an hour on it and rarely reaches this sheet. A co-op membership record that arrives after a delivery carries a date, a document number and the price actually applied to that load, which is a named source in exactly the sense this header demands. It is not a market quotation and writing it in as one would corrupt the column, because a settlement reflects one delivery under one contract rather than what the market was paying that day. Keep it, name it as a settlement in the source column, and the difference between the two stays visible instead of being averaged away.
Why both numbers come from the same day
Because a difference taken across two dates measures the calendar as much as the market. Tonsor, Dhuyvetter and Mintert, working through Kansas State and publishing in the Journal of Agricultural and Resource Economics in 2004, state the requirement plainly: it is important when calculating basis that cash and futures prices are for consistent time periods. They followed their own rule twice over. For feeder cattle they used Wednesday’s nearby contract settlement price, because the cash series came from the Wednesday feeder cattle auctions in Dodge City, Kansas. For live cattle they averaged the week’s futures settlements instead, because that cash series was itself a weekly average.
The farm version of that rule is short. Read both numbers in the same sitting, write the hour, and when only one of the two is available that day, leave the line blank rather than mixing days. A blank line is honest and costs nothing. A mixed line is wrong and looks identical to a right one.
Once a week, on a day you do not move
Weekly for anything stored, daily for anything sold at auction. Kansas State is explicit that daily would be ideal and that weekly is what actually gets done: because that is time-consuming and day-to-day changes are usually quite small, it is common to record grain basis information once per week (i.e. Wednesday cash and futures prices). The exception is the animal sold on a named day. Where the cash price represents a specific day, as at a feeder cattle auction, the basis should be calculated daily rather than by a weekly average, using the auction cash price and the futures price for the same day.
Write the holiday rule into the header while you are there. Taylor, Dhuyvetter and Kastens collected Wednesday prices from 1982 through 2005 and needed one line to cover it: if a Wednesday happened to fall on a holiday, the Thursday price was used. Whoever feeds the sheet will hit that case within the first year, and will decide something. Deciding it in advance costs one sentence.
Nobody is keeping this record for you
This is the part that surprises people, and it comes from the methods section rather than the results. Taylor, Dhuyvetter and Kastens, wanting the local cash price history for their Kansas locations, reported that historic data for local elevator cash prices often are not readily available to the public, and so collected the prices themselves, week by week, from newspapers and a market data service, from 1982 through 2005. Three university researchers had to build by hand the series for the counters they were studying.
Exchange quotes are archived by the exchange. What the buyer down the road actually offered on a Wednesday is not archived by anybody, and it is the half of the subtraction that is specific to your farm. Kansas State’s answer to that is the plainest sentence in the guide: worksheets can be used to record and summarize this data.
The number in your head is not the number in his
Ask people who farm the same crop in the same region what they expect it to fetch and the answers do not converge. Mattos and Poirier put a marketing exercise in front of 75 grain producers across southern Manitoba in 2012, on paper, about 25 minutes each, and asked at the outset what they expected wheat to be worth that September. The answers spanned more than a twofold range, from the lowest to the highest. One crop, one province, one month, and the number standing in for the market was a different number in every head.
The authors hold that where it belongs, and so does this article. They recruited through Manitoba Agricultural, Food and Rural Initiatives, so the people who took part were closer to it than the typical producer and do not stand for every farm in the province, and they add that the strong price uptrend running at the time of the study could have affected producers’ reference prices before it began. What survives that is not a claim about anybody’s judgment. It is that a number carried in a head is personal property, and two people on the same farm will feed an unsourced sheet with different figures and both be sure.
The column that moves least is the one worth keeping
The seventh column is there because it is the steady one. Kansas State reports that basis levels generally can be predicted with more accuracy than either futures or cash price levels, and gives the reason: cash and futures move together, so the absolute difference between these prices fluctuates less than the prices themselves.
The limit is attached to that same sentence: for short stretches the two can move in opposite directions, and the difference column moves with them. The guide measures the gap between the two in one place. Comparing wheat at Dodge City, Kansas, from June through December in 1989 and in 1987, it found the price levels far apart between the two years and the average basis nearly unchanged.
One counter, two years, and that contrast is the whole argument for the seventh column. The price column tells you what the market did, which you would have heard anyway. The difference column tells you about your own counter, and nobody is going to mention that on the radio.
How long before the sheet means anything
Longer than you would like, and the published answer has moved. Dhuyvetter and Kastens, working with Kansas data from 1989 to 1997, settled on one stretch of past years for wheat and a longer stretch for corn, milo and soybeans. Taylor joined the same two authors and ran it again over 1989 to 2005, and the answer shortened: less history worked better than more, the main exception being wheat basis at harvest, and no single rule came out best in every case. Their own reading is that the value of using longer-term averages to predict future values has diminished.
Take the practical half of that and leave the forecasting half alone. How many past cycles your comparison uses is a decision somebody makes and writes in the header, and it is not a property of the market that you will discover by staring at the sheet. Twelve weekly lines let you see this week against the last twelve. They do not let you say what is normal, and a sheet three months old that claims to know what is normal is worse than no sheet.
The trigger is written before the first line
Under the sheet, dated and signed, before a single line is filled in. A trigger written after the record exists is written to fit what the record already shows, and the direction it drifts is always the same one: wait a little longer. Write the number that fires a decision, and write the name of the person who can act on it without calling anybody. The floor that number starts from is the break-even price, and the page that holds the channel, the tranches and the review dates is the written selling plan, which is where a trigger belongs once there is more than one of them.
A trigger is a goal with a number and a deadline narrowed to one decision, which is why “when the price is right” fires never and fires always. At the end of the cycle the sheet becomes the outside half of a comparison whose inside half is what actually sold, at what, and on which day, which is the sales against the plan. This is the half that has to be built while nothing is happening. The rest of the axis is in the marketing library, and the four functions it sits inside are in farm management.
Where to start
Twenty minutes to build the sheet, ten minutes a week to feed it. Nothing here needs a broker, a subscription or a forecast.
Ten minutes a week for three months buys twelve lines and one sentence somebody can be held to. The twelve lines are worth little on their own, and the sentence under them is worth something from the first day, because it is the only part of this that was written when nothing was at stake. Every week after that, the sheet gets cheaper to keep and harder to argue with, which is the opposite of how the number in your head ages.