By Tom Polansek and Katha Kalia
May 5 (Reuters) – Archer-Daniels-Midland shares jumped on Tuesday after the grain trader increased its full-year profit forecast and beat quarterly earnings estimates, citing a strong oilseed processing outlook and clarity on U.S. biofuel blending mandates.
Uncertainty over the mandates in recent quarters had hung over global grain merchants that process crops into fuel and food, slowing the use of feedstocks such as soybean oil produced at ADM facilities.
After a lengthy delay, U.S. President Donald Trump’s administration in March ordered refiners to blend a record amount of biofuels into their gasoline and diesel this year and next.
ADM said it now had “a stable regulatory framework” and expected 2026 adjusted earnings between $4.15 and $4.70 per share, compared with its prior forecast of between $3.60 and $4.25 per share.
“The biofuel policy, not just in the U.S., but globally, is the most constructive it’s ever been,” analyst Heather Jones of Heather Jones Research told executives on an earnings call.
Shares were up more than 5%.
FULL-YEAR FORECAST RISES
Some analysts expected ADM to increase its full-year forecast to closer to $5 per share. The company posted an adjusted profit of 71 cents per share for the three months ended March 31, compared with analysts’ average estimate of 66 cents, according to data compiled by LSEG.
“We do not think the guidance increase was a particularly positive surprise,” JPMorgan analysts said.
Rival agribusiness Bunge Global last week also raised its annual outlook due to strong oilseed processing margins and expectations for improved biofuel demand.
The companies face risks from tariff battles and the Iran war, which has disrupted global shipments of fuel and fertilizer needed by farmers. ADM facilities that convert corn into starches and sweeteners are large users of energy and chemicals, CEO Juan Luciano said.
“The costs of those plants are not doing great right now with the conflict,” he said on the call.
CRUSHING UNIT POSTS LOSS
Soaring crude oil markets have pushed soybean oil prices to their loftiest levels in more than three years, a boon for oilseed processors including ADM and Bunge.
However, ADM’s crushing unit fell to a quarterly operating loss of $79 million from profits of $47 million a year earlier. The company attributed the decline to mark-to-market losses but said most of those would reverse in the second quarter.
In the agricultural services unit, quarterly operating profit rose 26% from a year earlier to $200 million. The business benefited from increased soybean and sorghum exports to China from North America, ADM said.
Trump and Chinese leader Xi Jinping are set to meet this month after an October trade truce boosted U.S. crop exports to China, the world’s biggest soybean importer.
“Our assumption is that China will continue to buy its normal volume in Q4 but that’s to be watched,” CFO Monish Patolawala said.
(Reporting by Katha Kalia in Bengaluru and Tom Polansek in Chicago; Editing by Shailesh Kuber, Ronojoy Mazumdar and Barbara Lewis)
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