Dictionary Home »
Webster's New World Finance and Investment Dictionary » crush spread
crush spread
crush spread definition - finance
The
purchase of soybean futures and the simultaneous selling of soybean oil and
soymeal futures, or vice versa. It is an inter-commodity spread, which is the
difference between the prices of a commodity, soybeans, and its two products,
soybean oil and soybean meal. Crush strategies can be a profitable way to take
advantage of price differences between the underlying product and those that
are derived from it. Spreads typically are traded by commercial users such as
food manufacturers. By trading spreads, hedges can be moved from one contract
month to another. Trading spreads also provides a method to recover costs such
as storing or financing inventories.
Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.
Comments
Improve this definition.
Share on Facebook