An intercommodity spread holds opposing futures positions in two related markets. The question is whether their price relationship changes—not whether either market rises alone. Start with the economics of the pair, then make the units and contract dates comparable before reading a chart.
What counts as an intercommodity spread?
These structures pair different commodities or distinct benchmarks with an economic connection. KC hard red winter wheat versus Chicago soft red winter wheat compares two wheat classes. Corn versus wheat can reflect competition in feed use, but the products have different supply stories. A soybean crush combines beans with processed products and needs three legs and explicit weights; it has its own guide.
A calendar spread, by contrast, compares different delivery months of the same product. See the calendar spread guide for that separate question.
Write down the basket first
Specify the long and short products, exact month and year for each leg, contract multiplier, currency, and direction. When both contracts have the same price unit and contract size, a simple quoted difference can be informative. Otherwise convert both legs to a shared physical unit or to USD exposure before combining them. A chart of raw prices with incompatible units can look attractive while describing no meaningful trade.
Why the relationship changes
Quality premiums, regional supply, freight, harvest conditions, demand substitution and delivery rules can all move an intercommodity spread. A strong correlation between the outright contracts does not guarantee a stable spread. Basis and liquidity may change abruptly around expiry or a weather event.
How to test seasonality
Use the same dated-leg mapping in each historical year and keep the entry and exit window fixed while comparing years. Count only years with both leg prices on both dates. Inspect each year, the worst interim move, the number of valid observations and the cost assumptions. An average line summarizes history; it is not a forecast or a direct future price target.
Margin and execution
A clearing house may recognize an offset between related contracts, but the rate is product- and portfolio-specific and can change. Check the broker requirement for the exact legs and ratio. If the legs cannot be entered as one exchange-listed strategy, execution may create temporary outright exposure and slippage.
Test the exact dated structure
Inspect the leg months, historical years and selected window before drawing a conclusion from an average curve.
Open Futures Spread Analyzer →Frequently asked questions
Is a wheat spread always 1:1?
No. Matching contract sizes can make a 1:1 example easy to quote, but the chosen risk balance, eligible exchange strategy and broker margin must be checked for the actual contracts.
Does a spread remove outright risk?
It reduces some shared price exposure but retains relative-value, basis, liquidity and expiry risk.
Exchange references
Use the exchange material for product definitions and confirm current specifications, listed combinations and margins with your broker.
Continue the Intercommodity Spreads series
Also read Futures Spread Trading and Calendar Spread Trading.
Bring the formula to the chart
Compare a defined structure across historical years and review every leg before making a decision.
Explore the Analyzer →Educational material only, not investment advice. Examples are illustrative. Historical results do not guarantee future performance. Trading costs and slippage are excluded unless explicitly stated.