Dive Brief:

• Archer-Daniels-Midland cut its full-year earnings per share guidance on Tuesday, with executives on the global grain giant’s Q3 earnings call saying they are on track to cut $200 million to $300 million in cost savings this year as they await clarity regarding U.S. biofuel policy and the U.S.-China trade deal.
• The Chicago-based company’s CFO Monish Patolawala during the call said that the “evolving global trade landscape” and the deferral of the U.S. biofuel policy affected demand for the company’s agriculture services and oilseeds, a key business segment that includes oils derived from crushing soybeans and canola. The AS&O segment’s operating profit fell 21% year-over-year to $379 million, he said.
• “The two big events that will move commodity prices will be clarity on the China trade deal and regulatory clarity on the biofuels policy,” CEO Juan Luciano said on the call. “And until then, things are going to be a little bit hand to mouth for a while.”

Dive Insight:

ADM reported earnings just days after President Donald Trump announced a trade and economic deal with President Xi Jinping of China that includes a provision that would open China’s market to U.S. soybeans and other agricultural markets. 

The cut to ADM’s outlook marks its third this year, and comes as the company and others in the grain sector have struggled with declining earnings after years of low crop prices and weaker demand from buyers, The Wall Street Journal reported. 

The guidance reduction was driven by a lower soybean crush margin, likely due to ADM’s bigger fooptint in North America compared to its peers, Morningstar Research Senior Equity Analyst Seth Goldstein said Tuesday. 

“In the near-term, ADM was slightly affected by global grain trade shifts as China is buying more soybeans from South America and not the US,” Goldstein wrote in an email. “But I don't expect a longer-term impact as trade flows shift. This is because global soybean demand will be unchanged, it is just a matter of it taking a little bit for US exports to change in response to China buying more from South America.” 

Ultimately, he sees more U.S. soy going to other markets, including Europe, Southeast Asia, and the Middle East. At the same time, though China has already stocked up on crop imports from Brazil earlier this year, the new agreement may make China more willing to buy U.S. soybeans early next year. “Either way, I see more normalized demand for soy in 2026 as trade flows shift,” he said. 

The company on Tuesday cut its full-year earnings per share guidance to a range between $3.25 and $3.50 from about $4 a share.

“During the third quarter, we made solid progress in areas within our control, as we navigated a highly dynamic global environment. We advanced our portfolio optimization initiatives, accomplished cost savings through targeted streamlining, efficiently ran our plants and generated robust cash flow,” Luciano said in a statement in the earnings.

On the call he was cautiously optimistic about Trump’s trade deal with China, noting that details are still needed. While “on the surface” it is positive for ADM and grain in general, Luciano noted that he hadn’t seen a joint document containing details.

“It’s a big difference whether the 12 million tons of soybeans will happen in calendar year or in the marketing year, of course. And whether that's counted the material that is sold versus the material that is shipped…[and] at what prices that will happen,” Luciano said, noting that farmers have also been slow to book sales amid the uncertainty.  

Patolawala also reiterated that the timing was unclear around when biofuels policy would be solidfied, although an analyst asserted that there was some hope that they would get finalized in Q1 of next year. 

“Sitting today, since we still don't have clarity, the book that we are looking at for Q1 right now is, I would say, flattish to Q4,” Patolawala said.

In an August report on the company Morningstar’s Goldstein wrote that new U.S. renewable fuel standards, which require more ethanol to be blended by oil refiners for use in transportation fuels, should boost demand for the company’s soy oil as it is a key ingredient in renewable fuels.