The difference between the cost of soybeans (the total cost of production) and the combined sales income of the processed soybean oil and meal (the total revenue from production). It is considered as a type of risk that may be faced by a processor or producer. Considering that a bushel of soybeans under normal conditions produces 11 pounds of oil, 48 pounds of soybean meals and one pound of hulls and waste, then the gross processing margin (GPM) per bushel of soybeans is:
GPM= 11 × price per pound of oil + 0.024 × price per ton of meal – price per bushel of raw soybeans
Where: 0.024 = 48/2000 tons of soybean meal (each bushel consists of 60 pounds of soybeans and 2,000 pounds constitute a metric ton).
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