When creating a contract for a given commodity, a buyer will set their desired price for a particular base grade. Following this, the buyer has the option of adding additional grades to the contract - with each grade having a spread that is added to the price of the base grade. For instance, in a wheat contract, a buyer may set the base grade of APW1 at $200 per tonne, and then add a spread for ASW1 of -$5. This means that, should the growers wheat delivery be determined to have an ASW1 grade, the price that the buyer is obliged to pay per tonne will be adjusted to $195 (for that delivery).
