Glossary

Plain-language definitions for terms used across this site, written for farmers and other practitioners rather than traders.

Basis

The difference between a local cash price (what you'd actually be paid at your elevator or buyer) and the nearby futures price on an exchange. A key concept for anyone selling into a market that references futures prices, since it captures local supply/demand, transport cost and quality differences the futures price itself doesn't reflect.

Benchmark Price

A single reference price meant to represent an entire global or regional market, rather than any one specific transaction, region or quality grade. The World Bank Pink Sheet prices used throughout this site are benchmark prices, not necessarily what any individual farmer or buyer paid.

Bushel

A US customary unit historically defined by volume, but standardized today as a fixed weight per crop (e.g. 27.2155 kg for wheat, 25.4012 kg for corn) rather than a fixed volume, since different grains pack to different densities. Still the standard trading unit on US exchanges like the CBOT.

Export Restriction

A government limit or ban on exporting a commodity, usually to protect domestic supply during a shortage. Can cause sharp price spikes in countries that depended on those exports, even when nothing changed in their own domestic harvest.

Futures Contract

A standardized agreement to buy or sell a fixed quantity of a commodity at a set price on a future date, traded on an exchange like the CME or Euronext. Used both by producers and processors to lock in a price ahead of time (hedging) and by financial traders speculating on price moves.

Hedging

Using a futures or forward contract to lock in a price in advance, reducing exposure to price swings between now and when a crop is actually sold or an input is actually bought. The opposite of speculating: the goal is to reduce risk, not to profit from price moves.

Metric Ton

1,000 kilograms - the standard weight unit for most agricultural commodity prices worldwide, apart from US exchanges that still quote grains per bushel.

NPK

Shorthand for the three primary plant nutrients supplied by fertilizer: nitrogen (N), phosphorus (P) and potassium (K). A fertilizer's "NPK number" (e.g. 10-10-10) states the percentage of each by weight.

Pink Sheet

The World Bank's monthly "Commodity Markets Outlook" report - an informal nickname (from the original paper edition's color) that happens to be shared, unrelated, with a US penny-stock listing service. This site's global benchmark prices come from it.

Producer Price

The price actually received by farmers at the farm gate, before further transport, processing or retail markups. Differs from, and is usually lower than, retail or export prices for the same commodity.

Spot Price

The price for immediate delivery, as opposed to a futures price for delivery at a set date in the future.

Volatility

How much and how quickly a price moves up and down over a given period. High volatility means large swings are common, which matters for anyone timing a sale or purchase, not just for financial traders.