Crush Spread

AAA

DEFINITION of 'Crush Spread'

A trading strategy used in the soybean futures market. A soybean crush spread is often used by traders to manage risk by combining soybean, soybean oil and soybean meal futures positions, into a single position. The spread position is used to hedge the margin between soybean futures, and soybean oil and meal futures.

INVESTOPEDIA EXPLAINS 'Crush Spread'

By simultaneously purchasing soybean futures and selling soybean meal futures, a trader is attempting to establish an artificial position in the processing of soybeans, created through the spread. Since the spread relationship between the futures will vary over time, traders can gain directional exposure to the movements.

RELATED TERMS
  1. Intercommodity Spread

    Going long on one futures market in a given delivery month and ...
  2. Commercial

    Relating to commerce. In the investment field, the term "commercial" ...
  3. Crack

    A trading strategy used in energy futures to establish a refining ...
  4. Crack Spread

    The spread created in commodity markets by purchasing oil futures ...
  5. Bear Spread

    1. An option strategy seeking maximum profit when the price of ...
  6. Gross Processing Margin - GPM

    The difference between the cost of a raw commodity and the income ...
Related Articles
  1. Are Derivatives Safe For Retail Investors?
    Options & Futures

    Are Derivatives Safe For Retail Investors?

  2. Using Open Interest To Find Bull/Bear ...
    Options & Futures

    Using Open Interest To Find Bull/Bear ...

  3. Intro To Open Interest In The Futures ...
    Options & Futures

    Intro To Open Interest In The Futures ...

  4. Interpreting Volume For The Futures ...
    Options & Futures

    Interpreting Volume For The Futures ...

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center