john risk - wheat price direction?, page-38

Well it looks like grain prices are firmly entrenched in a downward trance ... at least in the fairy land of global grain futures. A fertile place for price manipulation on a worldly scale. Interestingly the basis, the one component of price a producer receives after converting futures prices to the local currency, for all grains in Australia are remaining strong and even strengthening.

Lets look at how the basis for wheat is performing:



And now the phenomenal run up in basis for Australian canola over Canadian:



End users of physical will be reluctant to price grain on futures markets if real sellers aren't taking notice of the 'underlying futures' contract. Grain markets are fragmented and increasingly the basis will drive producer profitability as central bankers ramp up the deflationary attack on farm commodities.