Author: David E. Kenyon, Professor and Extension Economist, Department of Agricultural and Applied Economics; Virgnia Tech.
Publication Number 448-016, Revised July 2001
Futures prices determined at the major commodity exchanges represent prices of commodities delivered to Chicago; New York City; Decatur, Illinois; and other specified delivery points. None of these delivery points are located in Virginia. For hedgers in Virginia who are not going to make or accept delivery outside of Virginia, the futures prices must be adjusted to local cash market prices. The adjustment takes place by use of a factor called basis. Basis is the historical difference between local cash prices and futures prices at the time the hedger anticipates actually selling or purchasing the physical commodity. The historical difference indicates the local discount or premium relative to the futures price that hedgers can expect when they sell or purchase the physical commodity.
This report contains basis estimates for corn, soybeans and wheat in major Virginia markets. The user is assumed to understand the basic principles of hedging and the role of basis in hedging.
The estimates of basis for grain are computed using opening cash price bids to producers. The cash prices are from Commodity Newsletter published by Virginia Department of Agriculture and Consumer Services, 1100 Bank Street, Suite 805, Richmond, Virginia 23219-3638. The futures prices are the closing price on the same day as the quoted cash price from the Wall Street Journal. For example, to compute the Southeast Virginia September 2000 basis for corn using the December corn futures, the following calculations would be required.
Basis is calculated as cash price minus futures price. A negative basis means cash prices are below futures prices. A positive basis means cash prices are above futures prices. In the example above, cash prices on average were 24 cents less than December futures in Southeast Virginia during September 2000.
The basis estimates are presented in table form. Each table indicates the location, commodity, and years included. The years represent marketing years, beginning at harvest of the first year and ending 12 months later. The numbers in the body of the tables are expressed in cents per bushel. Each basis estimate is an average of the weekly basis for marketing years beginning in 1996 through 2000.* The numbers in parentheses under each basis estimate are the smallest and largest weekly basis during the period of years used in computing the average. These are provided to give the user a feel for the reliability of the basis estimate.
*For 2000 marketing year, the data ends in April 2001.
| Southeast Virginia | December | September | |
| Cash Price | Futures Price | Basis (¢/bu.) | |
| ($/bushel) | |||
| Sept. 4, 2000 | 1.72 | 1.94 | -22 |
| Sept. 11, 2000 | 1.70 | 1.96 | -26 |
| Sept. 18, 2000 | 1.64 | 1.90 | -26 |
| Sept. 25, 2000 | 1.71 | 1.93 | -22 |
| Average | 1.59 | 1.93 | -24 |
For example, assume a corn producer in the Southeast wants to hedge corn that will be harvested in early September (before September 15). After locating the Southeast corn basis table, the producer selects the September cash month in the left-hand column since the corn is going to be sold in September. Following the second step, the September future contract is chosen because it matures during September. The intersection of September cash and September futures produces a basis estimate of -12 cents. The -12 cents means that during the five marketing years 1996/97 to 2000/2001, the September cash price on average was 12 cents less than the September futures price in September. The -58 cents and +6 cents in parentheses under the average indicate that one week in September during the five years the basis was -58 cents and in another week +5 cents, the weakest and strongest basis during the five years used in computing the average. Remember, these range numbers are the extremes. In most years, the actual basis will be within 5-10 cents of the historical average basis.
In many Virginia markets, wheat is only actively traded during June through September. For this reason, some of the wheat basis estimates for October through May are based on less than five years of data. All estimates shown are based on 8 or more weeks of data. In some markets, no cash prices were reported in the winter or spring, so these months have been eliminated from the tables. Be more careful when using wheat basis estimates for the months of October through May.
In the spring of 1996, corn and wheat cash and futures prices reached historically high levels. Some local cash prices did not move in the same magnitude as futures prices. The result is some large negative and positive basis estimates. These estimates show up in the ranges under the average basis estimate. Under normal circumstances, these large negative and positive basis estimates should be given little consideration when making hedging decisions.
| MARKET | CASH DELIVERY MONTH | FUTURES CONTRACT MONTH | ||||
|---|---|---|---|---|---|---|
| SEP | DEC | MAR | MAY | JUL | ||
| EASTERN SHORE | AUG | 4 (-25 20) | -5 (-23 8) | -15 (-27 1) | -22 (-34 4) | -26 (-41 -6) |
| SEP | -9 (-54 15) | -9 (-31 2) | -19 (-43 -6) | -26| -31 |
(-58 -11) | |
| OCT | -16 (-45 4) | -26 (-56 -8) | -33 (-64 -14) | -38 (-72 -19) |
||
| NOV | -6 (-45 14) | -15 (-56 2) | -22 (-64 -5) | -27 (-71 -7) |
||
| DEC | -1 (-30 16) | -5 (-40 28) | -10 (-48 25) | -15 (-55 23) |
||
| JAN | 13 (-4 36) | 8 (-21 34) | 5 (-18 32) |
|||
| FEB | 17 (3 42) | 11 (-5 42) | 9 (-12 44) |
|||
| MAR | 10 (-26 27) | 9 (-10 30) | 4 (-16 37) |
|||
| APR | 16 (0 29) | 10 (-9 23) |
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| MAY | 1 (-25 16) | 3 (-30 18) |
||||
| JUN | 9 (-8 19) |
|||||
| JUL | -8 (-48 16) |
|||||
| NORTH CENTRAL (Culpeper & Winchester) | AUG | 28 (8 89) | 24 (-4 119) | 15 (-15 119) | 9 (-22 106) | 5 (-29 105) |
| SEP | 18 (-40 110) | 19 (-13 97) | 9 (-25 85) | 2 (-33 77) | -2 (-40 71) |
|
| OCT | 6 (-19 33) | -4 (-31 21) | -10 (-38 15) | -15 (-46 10) |
||
| NOV | 13 3 (-37 49) | -4 (-49 36) | -9 (-57 29) | -9 (-64 22) |
||
| DEC | 14 (-21 53) | 7 (-35 43) | 2 (-43 36) | -4 (-51 29) |
||
| JAN | 18 (-10 40) | 13 (-14 33) | 10 (-9 26) |
|||
| FEB | 20 (-5 39) | 14 (-9 27) | 11 (-5 26) |
|||
| MAR | 13 (-5 31) | 12 (-4 27) | 10 (-4 25) |
|||
| APR | 15 (-17 46) | 14 (-3 37) |
||||
| MAY | 9 (-27 30) | 16 (-11 30) |
||||
| JUN | 29 (13 48) |
|||||
| JUL | 10 (-31 50) |
|||||
| NORTHERN NECK (Tappahannock) | AUG | 18 (-11 110) | 12 (-23 140) | 3 (-35 132) | -3 (-43 127) | -7 (-50 126) |
| SEP | -8 (-59 23) | -5 (-28 23) | -15 (-35 14) | -21 (-41 9) | -26 (-46 5) |
|
| OCT | -9 (-29 10) | -19 (-40 2) | -26 (-48 -4) | -31 (-56 -8) |
||
| NOV | -5 (-33 11) | -14 (-45 2) | -21 (-53 -3) | -26 (-60 -6) |
||
| DEC | 0 (-29 14) | -4 (-39 22) | -9 (-47 19) | -14 (-54 17) |
||
| JAN | 18 (4 35) | 12 (-10 29) | 9 (-9 27) |
|||
| FEB | 20 (8 46) | 15 (3 46) | 12 (-3 48) |
|||
| MAR | 11 (-15 27) | 10 (-10 24) | 8 (-15 25) |
|||
| APR | 13 (-4 31) | 12 (-2 35) |
||||
| MAY | 0 (-28 13) | 9 (-11 30) |
||||
| JUN | 12 (3 19) |
|||||
| JUL | 4 (-33 40) |
|||||
| PETERSBURG | AUG | 11 (-26 46) | 7 (-28 75) | -2 (-40 67) | -9 (-47 62) | -13 (-54 61) |
| SEP | -8 (-54 14) | -3 (-25 16) | -13 (-37 8) | -20 (-44 2) | -24 (-50 -1) |
|
| OCT | -3 (-30 24) | -13 (-41 16) | -20 (-49 10) | -25 (-57 7) |
||
| NOV | 8 (-36 37) | -1 (-47 31) | -8 (-55 26) | -13 (-62 23) |
||
| DEC | 17 (4 35) | 15 (-9 45) | 9 (-14 42) | 4 (-21 40) |
||
| JAN | 23 (6 51) | 18 (-11 49) | 15 (-8 47) |
|||
| FEB | 25 (12 51) | 20 (3 52) | 17 (-5 54) |
|||
| MAR | 15 (-18 29) | 15 (2 29) | 13 (-4 36) |
|||
| APR | 22 (12 59) | 21 (3 63) |
||||
| MAY | 12 (-18 27) | 17 (-25 43) |
||||
| JUN | 20 (0 40) |
|||||
| JUL | 8 (-23 48) |
|||||
| SHENANDOAH VALLEY (Harrisonburg) | AUG | 56 (16 143) | 50 (4 176) | 41 (-7 169) | 35 (-11 164) | 31 (-15 162) |
| SEP | 44 (-19 108) | 45 (7 133) | 35 (-5 126) | 29 (-13 120) | 24 (-20 121) |
|
| OCT | 27 (1 55) | 17 (-11 49) | 10 (-18 44) | 5 (-26 41) |
||
| NOV | 31 (-13 53) | 21 (-24 45) | 14 (-32 41) | 9 (-39 38) |
||
| DEC | 34 (-3 55) | 28 (-16 51) | 23 (-24 48) | 18 (-32 45) |
||
| JAN | 41 (23 57) | 36 (15 55) | 32 (9 53) |
|||
| FEB | 37 (23 52) | 32 (20 53) | 29 (14 55) |
|||
| MAR | 31 (-5 52) | 32 (22 47) | 29 (14 51) |
|||
| APR | 29 (-2 53) | 36 (6 57) |
||||
| MAY | 29 (-2 53) | 36 (6 57) |
||||
| JUN | 45 (25 65) |
|||||
| JUL | 39 (5 63) |
|||||
| SOUTHEAST (Wakefield) | AUG | 5 (-21 44) | 1 (-27 74) | -8 (-39 66) | -14 (-47 61) | -18 (-54 60) |
| SEP | -12 (-58 6) | -6 (-26 14) | -16 (-38 7) | -23 (-45 1) | -27 (-52 -1) |
|
| OCT | -5 (-38 28) | -15 (-49 20) | -22 (-57 14) | -27 (-65 10) |
||
| NOV | 3 (-40 28) | -6 (-51 22) | -13 (-59 16) | -18 (-66 13) |
||
| DEC | 15 (2 25) | 11 (-11 33) | 6 (-19 30) | 1 (-27 28) |
||
| JAN | 20 (-4 44) | 15 (-14 42) | 12 (-18 40) |
|||
| FEB | 22 (6 49) | 17 (-2 49) | 14 (-9 51) |
|||
| MAR | 12 (-21 23) | 12 (-6 25) | 10 (-12 32) |
|||
| APR | 18 (6 47) | 17 (-3 51) |
||||
| MAY | 5 (-27 26) | 11 (-33 40) |
||||
| JUN | 13 (0 29) |
|||||
| JUL | 2 (-34 41) |
|||||
| MARKET | CASH DELIVERY MONTH | FUTURES CONTRACT MONTH | ||||||
|---|---|---|---|---|---|---|---|---|
| NOV | JAN | MAR | MAY | JUL | AUG | SEP | ||
| EASTERN SHORE | OCT | -26 (-44 8) | -34 (-49 -15) | -41 (-56 -21) | -47 (-63 -23) | -52 (-69 -24) | -52 (-70 -17) | -29 (-59 0) |
| NOV | -26 (-44 -8) | -33 (-51 -7) | -38 (-57 -9) | -43 (-61 -13) | -47 (-66 -17) | -45 (-65 -11) | -25 (-58 10) |
|
| DEC | -21 (-35 -6) | -25 (-45 -9) | -29 (-53 -13) | -32 (-60 -15) | -31 (-62 -12) | -17 (-59 7) |
||
| JAN | -20 (-36 5) | -22 (-38 -2) | -27 (-44 -6) | -30 (-51 -8) | -29 (-52 -8) | -17 (-70 36) |
||
| FEB | -14 (-32 17) | -19 (-39 6) | -24 (-47 -3) | -27 (-87 -2) | -17 (-70 36) |
|||
| MAR | -20 (-59 7) | -23 (-47 3) | -29 (-55 1) | -27 (-57 10) | -10 (-59 75) |
|||
| APR | -23 (-59 11) | -30 (-63 5) | -27 (-50 7) | -6 (-52 90) |
||||
| MAY | -23 (-61 2) | -25 (-74 7) | -19 (-76 28) | 4 (-79 118) |
||||
| JUN | -23 (-51 13) | -11 (-44 53) | -10 (-46 129) |
|||||
| JUL | -37 (-89 13) | -30 (-67 4) | -3 (-56 73) |
|||||
| AUG | -33 (-76 6) | -25 (-72 3) |
||||||
| SEP | -39 (-121 -4) |
|||||||
| NORFOLK (Producer) | OCT | -17 (-30 -2) | -25 (-40 -8) | -32 (-49 -16) | -38 (-59 -18) | -43 (-67 -20) | -43 (-68 -17) | -18 (-46 1) |
| NOV | -17 (-30 -2) | -23 (-43 1) | -27 (-49 -1) | -32 (-53 -5) | -37 (-58 -9) | -35 (-54 -3) | -16 (-43 18) |
|
| DEC | -12 (-20 0) | -15 (-30 -6) | -19 (-38 -5) | -23 (-45 -5) | -22 (-47 -3) | -8 (-44 13) |
||
| JAN | -8 (-23 8) | -11 (-25 1) | -16 (-31 -5) | -19 (-36 -6) | -19 (-39 -2) | -7 (-40 26) |
||
| FEB | -7 (-19 3) | -13 (-28 0) | -18 (-37 -2) | -21 (-72 3) | -10 (-55 41) |
|||
| MAR | -10 (-46 20) | -12 (-39 16) | -18 (-42 14) | -15 (-44 23) | 2 (-45 93) |
|||
| APR | -11 (-34 26) | -18 (-38 16) | -15 (-38 20) | 6 (-41 103) |
||||
| MAY | -12 (-48 8) | -13 (-61 14) | -7 (-63 39) | 16 (-66 129) |
||||
| JUN | -8 (-34 49) | 0 (-29 89) | 18 (-31 151) |
|||||
| JUL | -17 (-44 10) | -12 (-41 23) | 5 (-38 60) |
|||||
| AUG | -37 (-151 16) | -9 (-55 18) |
||||||
| SEP | -32 (-128 -6) |
|||||||
| NORTHERN NECK (Tappahannock) | OCT | -14 (-34 5) | -22 (-39 -5) | -29 (-46 -14) | -36 (-53 -24) | -41 (-58 -30) | -41 (-58 -29) | -21 (-41 -9) |
| NOV | -14 (-34 5) | -20 (-36 8) | -25 (-42 6) | -29 (-47 2) | -34 (-52 -2) | -32 (-51 4) | -11 (-40 25) |
|
| DEC | -6 (-23 11) | -10 (-30 11) | -14 (-37 7) | -17 (-42 3) | -16 (-42 8) | -1 (-34 26) |
||
| JAN | -2 (-16 27) | -5 (-29 20) | -9 (-29 13) | -13 (-35 10) | -12 (-35 11) | -1 (-36 29) |
||
| FEB | -1 (-15 14) | -6 (-20 12) | -11 (-28 7) | -14 (-77 10) | -3 (-60 48) |
|||
| MAR | -5 (-37 24) | -8 (-36 20) | -14 (-45 18) | -12 (-48 27) | 5 (-49 90) |
|||
| APR | -9 (-41 28) | -16 (-45 21) | -13 (-35 22) | 8 (-38 93) |
||||
| MAY | -10 (-37 10) | -11 (-50 15) | -5 (-52 34) | 18 (-55 119) |
||||
| JUN | -11 (-27 24) | 4 (-29 64) | 28 (-31 132) |
|||||
| JUL | -26 (-74 -1) | -19 (-42 29) | 17 (-36 98) |
|||||
| AUG | -31 (-124 21) | -4 (-58 78) |
||||||
| SEP | -15 (-32 -1) |
|||||||
| PETERSBURG | OCT | -22 (-44 -2) | -30 (-50 -4) | -38 (-58 -11) | -44 (-64 -18) | -49 (-68 -20) | -48 (-68 -19) | -24 (-54 1) |
| NOV | -22 (-44 -2) | -30 (-56 -5) | -35 (-62 -7) | -39 (-66 -11) | -44 (-71 -15) | -42 (-64 -9) | -22 (-50 12) |
|
| DEC | -16 (-33 -7) | -20 (-40 -6) | -24 (-47 -4) | -27 (-52 -3) | -26 (-54 -3) | -11 (-51 13) |
||
| JAN | -13 (-20 5) | -16 (-25 -2) | -20 (-34 -9) | -23 (-41 -11) | -23 (-42 -7) | -11 (-43 25) |
||
| FEB | -9 (-20 5) | -14 (-29 3) | -20 (-38 3) | -22 (-75 8) | -11 (-58 46) |
|||
| MAR | -12 (-51 19) | -15 (-35 15) | -21 (-44 13) | -19 (-47 22) | -2 (-48 91) |
|||
| APR | -14 (-41 25) | -21 (-53 15) | -18 (-56 18) | 3 (-58 95) |
||||
| MAY | -18 (-46 5) | -19 (-59 11) | -14 (-61 36) | 9 (-64 126) |
||||
| JUN | -14 (-42 21) | -3 (-42 54) | 24 (-36 142) |
|||||
| JUL | -14 (-40 26) | -3 (-42 54) | 19 (-44 134) |
|||||
| AUG | -26 (-139 37) | -3 (-66 125) |
||||||
| SEP | -29 (-131 5) |
|||||||
| SOUTHEAST VIRGINIA (Wakefield) | OCT | -20 (-54 38) | -27 (-61 32) | -35 (69 24) | -41 (-73 22) | -46 (-79 20) | -44 (-77 21) | -17 ()-62 41 |
| NOV | -20 (-54 38) | -28 (-61 -3) | -32 (-67 -5) | -37 (-71 -9) | -42 (-76 -13) | -40 (-69 -7) | -20 (-53 14) |
|
| DEC | -15 (-24 -11) | -19 (-31 -6) | -23 (-38 -4) | -26 (-45 -3) | -25 (-47 -3) | -11 (-44 10) |
||
| JAN | -13 (-33 2) | -16 (-37 -4) | -21 (-37 -10) | -24 (-39 -11) | -23 (-47 -7) | -11 (-42 23) |
||
| FEB | -7 (-20 10) | -12 (-29 8) | -18 (-38 8) | -20 (-81 13) | -10 (-64 51) |
|||
| MAR | -15 (-53 14) | -17 (-39 10) | -22 (-44 8) | -20 (-46 24) | -3 (-47 87) |
|||
| APR | -15 (-36 27) | -22 (-44 17) | -19 (-47 20) | 3 (-49 98) |
||||
| MAY | -15 (-45 7) | -17 (-57 10) | -11 (-59 35) | 12 (-62 125) |
||||
| JUN | -15 (-39 24) | -4 (-38 47) | 18 (-40 131) |
|||||
| JUL | -17 (-44 25) | -6 (-41 31) | 21 (-38 129) |
|||||
| AUG | -15 (-85 66) | 6 (-57 147) |
||||||
| SEP | -32 (-126 5) |
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| MARKET | CASH DELIVERY MONTH | FUTURES CONTRACT MONTH | ||||
|---|---|---|---|---|---|---|
| JUL | AUG | DEC | MAR | MAY | ||
| EASTERN SHORE | JUN | -56 (-71 -42) | -67 (-83 -54) | -81 (-97 -67) | -92 (-109 -68) | -95 (-116 -44) |
| JUL | -59 (-67 -54) | -66 (-72 -60) | -80 (-89 -66) | -90 (-103 -64) | -89 (-114 -34) |
|
| AUG | -62 (-85 -46) | -77 (-101 -51) | -89 (-115 -49) | -92 (-123 -24) |
||
| SEP | -59 (-75 -44) | -68 (-90 -38) | -77 (-106 -32) | -78 (-115 -16) |
||
| OCT | -63 (-92 -37) | -72 (-108 -30) | -74 (-118 -12) |
|||
| NOV | -63 (-93 -33) | -72 (-109 -16) | -74 (-119 3) |
|||
| DEC | 49 (-81 -25) | -58 (-95 -9) | -61 (-105 13) |
|||
| JAN | -51 (-82 -20) | -46 (-93 6) |
||||
| FEB | -50 (-79 -15) | -51 (-90 20) |
||||
| MAR | -57 (-123 -34) | -56 (-85 -24) |
||||
| APR | -62 (-80 -41) |
|||||
| MAY | -67 (-129 -42) |
|||||
| NORFOLK (Producer) | JUN | -41 (-56 -23) | -51 (-67 -37) | -65 (-84 -50) | -74 (-96 -49) | -73 (-106 -25) |
| JUL | -41 (-50 -27) | -48 (-60 -29) | -61 (-78 -35) | -71 (-92 -33) | -70 (-101 -3) |
|
| AUG | -44 (-69 -20) | -59 (-85 -25) | -71 (-99 -23) | -74 (-107 2) |
||
| SEP | -40 (-57 -24) | -48 (-72 -18) | -57 (-88 -12) | -58 (-97 9) |
||
| OCT | -44 (-74 -17) | -53 (-90 -10) | -55 (-100 8) |
|||
| NOV | ID | ID | ID | |||
| DEC | ID | ID | ID | |||
| JAN | -41 (-60 -15) | -47 (-71 11) |
||||
| FEB | -34 (-57 -19) | -34 (-68 29) |
||||
| MAR | -43 (-103 -24) | -43 (-64 -18) |
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| APR | -44 (-60 -24) |
|||||
| MAY | -40 (-69 -23) |
|||||
| NORTHERN NECK (Tappahannock) | JUN | -45 (-64 -35) | -55 (-67 -43) | -69 (-81 -56) | -77 (-93 -63) | -76 (-103 -41) |
| JUL | -47 (-60 -38) | -53 (-68 -42) | -66 (-84 -48) | -75 (-98 -46) | -72 (-107 -16) |
|
| AUG | -49 (-69 -35) | -63 (-85 -40) | -75 (-99 -38) | -76 (-107 -13) |
||
| PETERSBURG | JUN | -48 (-66 -31) | -58 (-77 -42) | -72 (-94 -51) | -80 (-106 -48) | -78 (-116 -4) |
| JUL | -45 (-62 -30) | -52 (-72 -34) | -66 (-90 -43) | -76 (-104 -41) | -75 (-113 -11) |
|
| AUG | -51 (-72 -34) | -66 (-88 -40) | -78 (-102 -37) | -80 (-110 -11) |
||
| SEP | -48 (-63 -29) | -56 (-77 -23) | -65 (-93 -15) | -66 (-102 6) |
||
| OCT | -50 (-78 -17) | -58 (-94 -10) | -60 (-104 8) |
|||
| NOV | -42 (-70 -22) | -51 (-86 -13) | -53 (-96 7) |
|||
| DEC | -28 (-46 -16) | -34 (-58 -4) | -36 (-71 19) |
|||
| JAN | -19 (-39 4) | -14 (-47 20) |
||||
| FEB | -21 (-34 -14) | -22 (-37 24) |
||||
| MAR | -37 (-88 -20) | -37 (-59 -27) |
||||
| APR | -39 (-98 -19) |
|||||
| MAY | -52 (-120 -28) |
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| SOUTHEAST VIRGINIA (Wakefield) | JUN | -45 (-62 -28) | -56 (-73 -37) | -70 (-90 -46) | -80 (-102 -45) | -80 (-112 -21) |
| JUL | -44 (-57 -31) | -51 (-67 -33) | -65 (-85 -39) | -74 (-99 -37) | -73 (-109 -7) |
|
| AUG | -53 (-76 -31) | -68 (-93 -36) | -79 (-108 -33) | -82 (-118 -6) |
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| SEP | -46 (-62 -18) | -54 (-76 -12) | -63 (-92 -6) | -64 (-101 8) |
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| OCT | -45 (-72 -9) | -54 (-88 -2) | -56 (-98 17) |
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| NOV | -42 (-69 -17) | -51 (-85 -7) | -53 (-95 16) |
|||
| DEC | -28 (-36 -16) | -36 (-51 -5) | -38 (-61 17) |
|||
| JAN | -22 (-51 20) | -17 (-62 36) |
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| FEB | -25 (-45 19) | -25 (-57 30) |
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| MAR | -36 (-88 -19) | -36 (-55 -17) |
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| APR | -45 (-94 -24) |
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| MAY | -54 (-115 -27) |
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