Futures basis refers to the difference between the spot price of a specific commodity at a specific time and place and the futures price of that commodity in the futures market. Basis reflects the difference between spot market and futures market, which may come from many factors, such as storage cost, transportation cost, market supply and demand relationship and so on. The size and fluctuation of basis is of great significance to traders and hedgers in futures market. They can predict the market trend and risk by observing and analyzing the change of basis, so as to formulate corresponding trading strategies.

For example, if the spot price of a commodity is higher than the futures price, then the basis is positive, which may mean that the market demand of the commodity is high or the storage and transportation cost is high. On the contrary, if the spot price is lower than the futures price, then the basis is negative, which may mean that the market supply exceeds demand or the storage and transportation cost is low.

In futures trading, basis is also an important consideration. Traders need to decide when to enter or exit according to the size and fluctuation of the basis and how to adjust their investment portfolio. At the same time, the basis is also an important basis for evaluating the hedging effect. If the basis fluctuates greatly, the effect of hedging may be affected.

In a word, futures basis is an important indicator reflecting the difference between spot market and futures market, which is of great significance to traders and hedgers in futures market. They need to pay close attention to the change and fluctuation of basis in order to make more wise investment decisions.