Crush Spread
The crush spread is a trading strategy used in the soybean market to capitalize on the price difference between soybeans and their by-products, namely soybean meal and soybean oil. It reflects the profitability of processing soybeans into these derivatives. The typical spread ratio involves buying 10 contracts of soybeans and simultaneously selling 11 contracts of soybean meal and 9 contracts of soybean oil (10:11:9 ratio). This strategy aims to profit from the gross margin soybean processors achieve through the conversion process.