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You are indeed correct. The term basis is used in a variety of ways to detail several very important series 3 concepts. First off, the term basis is used to describe the cash commodity. So for a wheat contract the basis is cash wheat. Next, it is used to note the standard grade of the cash commodity. The basis grade for wheat is number 2 wheat. This is the quality that is expected to be delivered. Finally, basis is the spread between the price of the cash commodity and the price of the front month futures contract. So if cash wheat is priced at $6.12 per bushel and the front month contract was trading at $6.20, the basis would be 8 cents under. The market is regularly quoted on its basis. If a question on your exam stated that the soybean market is 4 cents under you would know that the price of the cash commodity would be trading at a price 4 cents lower than the front month futures contract. Of course there are a significant number of questions that talk about a change in the basis. These questions seem to be the most challenging for test takers. Keep in mind that a change in basis simply reflects a change in the spread between the price of the cash commodity and the front month futures price. When the basis becomes stronger in a normal market the spread is less negative and contracts. If corn went from 8 cents under to 5 cents under, we would say that the basis strengthened. -5 is less negative than -8. The basis becomes weaker when it becomes more negative. If Crude went from $7 under to $12 under the basis would have weakened. Check out the section in our videos that covers everything you need to know.