What does Crush Spread mean?
In futures markets, crush spread refers to the simultaneous purchase of a raw commodity futures and the sale of futures of commodity products obtained after crushing and processing. The underlying is the difference between the commodity price and the market value of products that could be obtained after it is crushed, processed and refined.
Futures Knowledge Explains Crush Spread
For example in the futures market, you can make the simultaneous purchase of soybean futures and the sale of soybean meal and soybean oil futures. Your earning will depend on the likely variations in processing margin. In the same way, another trader can go for reverse crush spread; they would sell soybean futures and simultaneously buy soybean oil and meal futures.