The basis refers to the difference between the spot price of a specific commodity at a specific time and place and the futures price of the commodity in the futures market, that is: basis = spot price - futures price.

The basis results are different depending on the reference material. As far as the same market is concerned, the basis difference in different periods should theoretically fully reflect the holding cost, that is, the basis difference of the holding cost changes with time. The longer the time until the expiration of the futures contract, the higher the holding cost. The greater the cost, and when very close to the expiration date of the contract, the spot price and the futures price at a certain location must be almost equal, and the basis for agricultural products, minerals, etc. will shrink to reflect only transportation costs.

Using the near-month futures price as a reference is the near-month basis; taking the far-month futures price as a reference is the far-month basis.