Back To School #51: Intercommodity Spread

“Back to School with Ed Usset” is a new feature of Corn & Soybean Digest, in cooperation with Ed Usset and the Center for Farm Financial Management. Ed’s challenging and authentic quiz questions are designed to test your grain marketing knowledge, and will help you learn while having fun! Ed Usset is the author of “Grain Marketing is Simple, It’s Just Not Easy,” and is a grain marketing specialist at the University of Minnesota.

Questions and Answers

1.

To simultaneously buy wheat futures and sell corn futures is an example of a (an)...
- A.
  
  Bull spread
- B.
  
  Interdelivery spread
- C.
  
  Cross-hedge
- D.
  
  Intercommodity spread
Correct Answer
D. Intercommodity spread

Explanation
Buying wheat futures and selling corn futures is an example of an intercommodity spread. Spread trading is popular and the wheat/corn spread is followed by many in the market. The Dec’10 wheat/corn spread was $1.25 per bushel in early June. The wheat premium reached nearly $4 in August and now stands at about $2.25 per bushel. How’s that for volatility and trading opportunities?

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Current Version
Mar 17, 2022

Quiz Edited by
ProProfs Editorial Team
Feb 15, 2011

Quiz Created by
Ed-usset

Back To School #51: Intercommodity Spread

To simultaneously buy wheat futures and sell corn futures is an example of a (an)...