Gross Processing Margin - GPM

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.

Investopedia explains '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).


Filed Under: ,

comments powered by Disqus
Hot Definitions
  1. Gross Debt Service Ratio - GDS

    A debt service measure that financial lenders use as a rule of thumb to give a preliminary assessment about whether a potential borrower is already in too much debt. Receiving a ratio of less than 30% means that the potential borrower has an acceptable level of debt.
  2. Federal Reserve Note

    The most accurate term used to describe the paper currency (dollar bills) circulated in the United States. These Federal Reserve Notes are printed by the U.S. Treasury at the instruction of the Federal Reserve member banks, who also act as the clearinghouse for local banks that need to increase or reduce their supply of cash on hand.
  3. Benchmark Bond

    A bond that provides a standard against which the performance of other bonds can be measured. Government bonds are almost always used as benchmark bonds. Also referred to as "benchmark issue" or "bellwether issue".
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures.
  5. Oil Reserves

    An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.
  6. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
Trading Center