By Karl Plume and Sumit Saha
Aug 4 (Reuters) – U.S. agribusiness Archer-Daniels-Midland raised its 2026 profit outlook on Tuesday as it beat Wall Street estimates for second-quarter earnings on strong crop processing margins and favorable U.S. biofuels policies.
Soaring energy prices triggered by the Iran war swelled margins for producing corn-based ethanol fuel and crushing soybeans for use in crop-based diesel. Higher U.S. biofuel blending mandates after a lengthy delay also lifted uncertainty that had weighed on earnings.
Higher margins mark a turnaround for ADM, and peers such as Bunge Global and Cargill, after a global grains glut and trade disruptions had depressed earnings for the agribusinesses in recent quarters.
Chicago-based ADM raised 2026 adjusted earnings to between $5.15 and $5.60 per share, compared with a prior forecast of $4.15 and $4.70 per share, citing improvement in its crushing and ethanol businesses and as it expects a “constructive margin environment” to continue.
ADM’s shares rose 3.8% in premarket trading.
Crop processing volumes swelled as a rally in grain prices since the start of the Iran war triggered fresh farmer selling of corn and soybeans, which were stored from last year’s crop during a prolonged period of low prices.
Operating profit in ADM’s ag services and oilseeds unit, its largest business segment, jumped 129% from the same quarter a year earlier as margins expanded after the U.S. government ordered refiners earlier this year to blend a record amount of biofuels into their gasoline and diesel this year and next.
Strong crop grain export demand offered further support to the global grains merchant.
The company’s carbohydrate solutions segment, which includes ADM’s ethanol and sweeteners businesses, notched a 22% gain year over year, while its high-margin nutrition unit reported a 51% rise in operating profit from a year earlier.
The company posted an adjusted profit of $1.84 per share for the three months ended June 30, topping analysts’ average estimate of $1.44, according to data compiled by LSEG.
(Reporting by Karl Plume in Chicago and Sumit Saha in Bengaluru; Editing by Shinjini Ganguli and Susan Fenton)
Comments