Price spreads: the art of arbitrage
The price gap between two maturities or two crops is not random it reflects storage costs, consumption substitution and export flows. Knowing how to read it is a competitive edge.
7 April 2026·3 min read
July wheat is at €210/t. December wheat is at €220/t. That €10/t gap is not arbitrary: it represents the cost the market is willing to pay for someone to store that wheat from July to December. This is the carry spread — and it tells you exactly whether storing is profitable or not.
The two main spread families
| Spread type | Example | What it reveals |
|---|---|---|
| Inter-maturity spread | July wheat vs December wheat | Implicit storage cost · Current supply tightness (backwardation = tight market) |
| Inter-product spread | EBM wheat vs EMA corn | Feed substitution · Relative competitive advantage |
| Geographic spread | Euronext wheat vs converted CBOT wheat | European vs North American export competitiveness |
Backwardation vs Contango
The wheat-corn spread: substitution indicator
The price gap between wheat and corn is one of the most practical indicators for a mixed-crop farmer:
- Wheat/corn spread > €30/t: corn is relatively cheap. Feed manufacturers will substitute corn for feed wheat → pressure on feed wheat.
- Wheat/corn spread < €10/t: feed wheat is nearly at the corn price. Demand for wheat incorporation in animal feed increases → support for lower-quality wheat prices.
- For your hedging decisions: if you grow both crops, the spread tells you which one to hedge first, according to relative tightness.
Key point: a market in backwardation (spot price > futures prices) is telling you to sell now — the market is "paying" to have the grain immediately. A market in steep contango is telling you that storage is rewarded — but only if the premium exceeds your real carrying cost. Spreads are a compass: read them before any storage or hedging decision.
These spread concepts are directly visible in the Analyses → Spread tool on GrainDecision, which compares Euronext forward curves in real time.