commodity product spread

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Commodity Product Spread

A spread involving different but related commodities. In it, one buys (or sells) futures in a raw commodity at the same time one sells (or buys) futures in a product of that commodity. For example, one may buy futures for crude oil while selling futures in refined oil. Commodity product spreads are useful because they can take advantage of price spread between the underlying commodities and the products that can be derived from soybeans. See also: Crush, Crack.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

commodity product spread

A spread involving two commodities: a primary commodity and a byproduct of the primary commodity. For example, an investor might purchase a contract for soybeans and sell short a contract for soybean oil.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.