A new online service, BeefBasis.com , provides beef producers with information and analytics they need to improve marketing decisions influenced by cattle basis risk. This site, developed by Custom Ag Solutions Inc. and
It includes cattle basis risk-analysis tools that use historical data from individual states to allow users to project prices and basis risk. Basis, defined as the difference between the local cash markets and futures contract prices, can vary dramatically between weight classes and market locations from year to year, according to the site. Understanding basis risk is essential to making effective use of price risk-management tools such as futures, options and forward contracts.
The site offers state-by-state feeder-cattle basis forecasts to help evaluate marketing decisions and manage price risk. To use the feeder-cattle basis forecast tool, the user fills in information regarding the market at which they plan to sell the cattle, projected weights and futures prices. The free service currently calculates basis forecasts for 15 states based on historical models, and Kansas State University economist Jim Mintert says it will expand to include more states.