Cash-futures basis

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The "cash-futures basis" is the difference between a commodity's or security's cash and futures prices. The cash-futures basis can be influenced by seasonal factors, weather conditions, temporary gluts or scarcities of commodities, and the availability of transport, among others. The relationship between cash and futures prices is also affected by carrying costs such as interest rates and warehouse fees.

In certain financial markets, basis reflects the difference between long-term and short-term interest rates.[1]

References

  1. The cash-futures basis. Institute for Financial Markets.
Last modified on 29 September 2011, at 10:31