Inter-commodity spreads are spreads between two different but related futures contracts, for example wheat versus corn, or live cattle versus lean hogs. In the case of the wheat versus corn inter-commodity spread, they are different commodities, but are related as they both serve as animal feeds and thus can be substituted for each other. This substitution effect is a direct limiting factor on how wide the spread can go between them. Inter-commodity spreads are widely regarded as the most complicated spreads as they tend to be more fundamentally driven and require a deep understanding of the fundamental relationships underlying the relevant markets.

The wheat versus corn spread is one of the more popular inter-commodity spreads. Wheat typically contains approximately 15% more protein than corn and thus the price of wheat will typically be more than its feed value over the price of corn. When wheat supplies are plentiful and corn supplies are tight, the price of wheat will be much closer to corn and in exceptional instances can trade below the price of corn.

Another important factor driving the value of the inter-commodity spread is seasonality of production. Corn is harvested in October through December, whilst Wheat is typically harvested June through July. The first new crop contract for Wheat is July and the first new crop contract for Corn is December and both Wheat and Corn usually experience contract price lows during their respective harvest periods, with December typically being the weakest month for Corn and July the weakest month for Wheat. Thus from July through December the December Wheat contract will ordinarily gain on December Corn, although the specific highs and lows and the exact timing will depend on the prevailing supply and demand factors influencing the two commodities.

A sugar versus orange juice spread would not qualify as an inter-commodity spread as there is no underlying relationship between them. Exchange-recognized inter-commodity spreads have a fundamental relationship with each other and typically qualify for reduced exchange margin requirements.

Another more complex inter-commodity spread is the commodity product spread, which is the spread between a commodity and its products. Examples include the crack spread in the energy complex and the crush spread in the grains complex. The crack spread is the spread between Crude Oil and its derivative products, namely Heating Oil and RBOB Gasoline and the crush spread is the spread between Soybeans and its derivative products namely, Soybean Meal and Soybean Oil.

Another form of inter-commodity spread is the inter-exchange spread. Such spreads are used to capitalize on pricing inefficiencies that exist between futures contracts that trade on different exchanges. Some of the more widely traded inter-exchange spreads are the inter-exchange spreads for the wheat contracts traded on the Chicago Mercantile Exchange (CME) and the Minneapolis Grain Exchange (MGE). Hard red winter wheat is traded on the CME spring wheat is traded on the MGE and soft red winter wheat is traded on the CME. Soft red winter wheat is the type of wheat that is prevalent near Chicago however the CME permits delivery of all three types of wheat against the Chicago wheat contract.

All three types of wheat can, to an extent, be substituted for each other. The combination of being able to deliver any type of wheat against the CME contract and the substitution effect usually ensures that the prices of the various types of wheat do not deviate too far out of line with each other. The spreads between the three markets respond to the relative supply and demand between the individual markets and are also influenced by the different growing seasons.

The different growing seasons give rise to a number of seasonal trades, with the relative size of the new crops and total supplies driving the relative spreads between the various new crop contracts. Further opportunities exist in old crop spreads where carryout figures tend to be a greater influence on the relative values between the crop contracts.