There are two major types of price-risks associated with marketing lambs. There is price risk due to unexpected declines in the overall national level of slaughter lamb prices and there is a basis-like risk. This risk is due to changes in local or regional lamb prices in relation to the national or overall slaughter lamb price level.
To help producers and feeders better understand basis risk and to apply this information to daily practices, the American Sheep Industry Association has posted a PowerPoint presentation to its Web site. This presentation walks through the definitions and provides examples in an effort to clarify the differences between price risk and basis-like risk.
Lamb Price Risk: LRP-Lamb and Basis Change can be found at www.sheepusa.org by clicking on the LRP-Lamb link in the lower right-hand corner of the home page.