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Narrow Basis |
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Narrow Basis A situation in which there is only a small difference between the spot price and the futures price for a commodity. This occurs when investors expect there to be little shift in supply or demand between the present time and when the commodity is delivered under the futures contract. A wide basis often becomes a narrow basis the closer a futures contract comes to maturity because there is less uncertainty; when this does not occur, arbitrage opportunities arise.
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