Archer-Daniels-Midland Faces Profit Forecast Cuts Amid Market Challenges
Archer-Daniels-Midland (ADM) has lowered its 2025 profit forecast for the third consecutive quarter, citing uncertainty around U.S. biofuel policies and global trade disruptions that have impacted oilseed crush margins. This news led to a significant drop in ADM’s stock price, with shares falling by 8% during pre-market trading.
The company, along with other agribusiness leaders, has experienced declining earnings in recent quarters due to an oversupply of global crops and volatility in commodity markets, which have reduced profit margins. The challenges have been further compounded by shifting policies and tariff threats from U.S. President Donald Trump, creating additional hurdles for global grain traders like ADM.
Specifically, the imposition of tariffs and changes in duty deadlines have disrupted trade flows, leading to a halt in Chinese purchases of U.S. soybeans and other agricultural products. This has contributed to a decline in crop prices, reaching multi-year lows. Additionally, the postponement of U.S. biofuel policy decisions, especially concerning renewable fuel blending requirements under the Renewable Fuel Standard, has slowed the use of feedstocks such as soybean oil produced at ADM's processing plants.
Earnings Performance and Outlook
In the third quarter, ADM’s agricultural services and oilseed segment, which is its largest division, saw a 21% decline in profits, reaching $379 million. Meanwhile, earnings from the crushing business plummeted by 93% in the same period.
ADM has revised its adjusted earnings forecast for 2025 to between $3.25 and $3.50 per share, down from its earlier projection of approximately $4.00. This figure also falls below the analysts' estimated average of $3.79 per share. However, the company remains optimistic about a potential rebound in 2026, citing proposed initiatives from the Trump administration to increase biofuel usage and reduce trade tensions with China.
Recent developments indicate that Trump and Chinese President Xi Jinping have agreed to ease certain tariffs and trade barriers. As a result, China has pledged to resume purchasing U.S. soybeans after a prolonged period of avoidance. This shift could help stabilize market conditions and boost demand for ADM’s products.
CEO Juan Luciano expressed confidence in the future, stating, “We expect biofuel policy clarity and trade policy evolution to provide demand signals for our industry.”
Analysts’ Perspective and Financial Results
Analysts from UBS have noted that 2026 looks promising for ADM, particularly with higher Renewable Volume Obligations (RVO) driving increased demand for soybean oil. This expectation aligns with the company’s strategic outlook for the coming years.
In its latest quarterly report, ADM recorded an adjusted profit of 92 cents per share for the three months ending September 30. This marks a six-year low for the quarter but still exceeded analysts' average estimate of 85 cents, according to data compiled by LSEG.
The company continues to navigate a complex landscape shaped by policy uncertainties, global trade dynamics, and fluctuating commodity prices. While current challenges persist, ADM remains focused on long-term growth opportunities, particularly in the biofuel sector and international trade relations.
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