basis grade

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Basis Grade

The minimum acceptable quality of a commodity for delivery on a futures contract. The basis grade must be described in the contract, and can strongly affect the price. To use an extreme example (unlikely in real life), a futures contract for rotten corn would be worth less than one for high-quality corn. In both cases, however, the basis grade is described in the contract itself.

basis grade

The specified grade for a commodity necessary for it to be acceptable for delivery on a futures contract.