what is a wide basis 
a wide basis is a condition found in futures markets whereby the local cash spot price of a commodity is relatively far from its futures price it is the opposite of a narrow basis in which the spot price and futures prices are very close together it is normal for there to be some difference between spot prices and futures prices due to factors such as transportation and holding costs interest rates and uncertain weather this is known as the basis however wide this gap typically converges as the expiration date of the futures contract approaches understanding wide basisultimately a wide basis indicates a mismatch between supply and demand if short term supply is relatively low due to factors such as unusually poor weather local cash prices may rise relative to futures prices if on the other hand short term supply is relatively high such as in the case of an unusually large harvest then local cash prices might fall relative to futures prices either of these situations would give rise to a wide basis where basis is simply the local cash price minus the futures contract price this gap should gradually disappear as the futures contracts near their expiration date because otherwise investors could simply exploit an arbitrage opportunity between the local cash prices and the futures prices 