The relationship of the local cash market price and futures market price is called basis. The value of basis is calculated by subtracting the price of the nearby futures contract from the local cash market price. For example, if the cash price for corn is $2.80 and the futures price is $3.00, then the basis is $0.20 under ($2.80 - $3.00 = -$0.20). With a cash price of $2.95 and a futures price of $2.90, the basis is $0.05 over ($2.95 - $2.90 = $0.05).

Basis = Cash Price - Futures Price