Step 2. Check the profit potential (Narrower basis)
 Item Dollars per cwt.

 Localized price 52.74
 Feeding costs 50.00
 Profit potential 2.74


 The net result of this narrower basis is that a profit of $2.74 per

cwt. would be realized rather than the $1.41 which was originally pro-

jected.

 The third situation which might occur is a wider basis than in the

base situation. For example, the hogs might be sold the last week when

the average basis historically has been $3.08. In this case the profit

potential is:

 Step 1. Check the futures potential (Wider basis)

 Item Dollars per cwt.

 December hog futures contract quote in July 52.00
 Basis in December subtract 3.08
 Localized price 48.92


 Step 2. Check the profit potential (Wider basis)

 Item Dollars per cwt.

 Localized price 48.92
 Feeding costs 50,00
 Profit potential -1,08


 The result of the wider basis is a potential loss of -$1.08. In

summary, the profit potential fluctuated between $2.74 and -$1.08 per

cwt. in one month just due to differences in the average basis.