Forecasting a moving target: The roles of quality and timing for determining northern U.S. wheat basis

While nearly instantaneous commodity futures price information provides price forecasts for national markets, many market participants are interested in forecasting local cash prices. Expected basis estimates are often used to convert futures prices into local price forecasts. This study considers basis patterns in the northern U.S. hard red spring and hard red winter wheat markets. Using data on basis values across 215 grain handling facilities, we empirically test the forecasting capabilities of numerous basis models. Contrary to basis models developed for other U.S. regions, recent futures prices, protein content, and harvest information are more important for accurate basis forecasts than historical basis averages.