Crush Spread

A crush spread is a processing spread trade where soybean futures are bought (long) and soybean oil and soybean meal futures are sold (short) simultaneously. Processors use this hedging strategy to hedge the later purchase price of soybeans and the later sale price of soybean oil and soybean meal (both soybean byproducts). The term crush refers to the process of crushing the soybeans in vats to produce oil and meal.