Gross Processing Margin - GPM

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DEFINITION of 'Gross Processing Margin - GPM'

The difference between the cost of a raw commodity and the income it generates once sold as a finished product. Gross processing margins (GPM) are affected by supply and demand. Because the prices for raw commodities and their processed versions fluctuate, investors are able to trade futures based on their expectations about changes in GPMs.

BREAKING DOWN 'Gross Processing Margin - GPM'

For some commodities, such as soybeans, the GPM changes seasonally as supply and demand rise and fall. Also, GPM may go by a different name depending on the commodity it is describing. For example, the GPM for oil is called the crack spread; for soybeans, it's called the crush spread (because soybeans are crushed to produce oil and meal).

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