Its shares were down 4.25 per cent in premarket trading.

Chicago-based ADM reported its weakest fourth-quarter adjusted profit since 2019 as slumping soybean processing margins in North and South America and poor U.S. soybean exports dented earnings for its Agricultural Services and Oilseeds business, its largest segment.

Low prices erode profits

A global grains glut that has dragged down prices of staple crops like corn and soybeans to near multi-year lows has eroded profits for ADM and agribusiness peers like Bunge and Cargill. U.S. biofuel policy delays and trade turmoil stemming from U.S. President Donald Trump’s tariff wars created further pressure on the global grains merchants.

The downbeat outlook comes as the U.S. Securities and Exchange Commission and the Justice Department concluded investigations into whether ADM had inflated the performance of a key business segment. ADM agreed to pay a $40 million civil penalty to settle SEC charges while the DOJ closed its criminal investigation, drawing a line under a years-long scandal that forced the company to twice revise its financial reports.

ADM reported adjusted earnings of 87 cents per share for the quarter ended December 31, down from $1.14 a share a year earlier but above the consensus analyst estimate of 80 cents, according to data compiled by LSEG.

CEO Juan Luciano said operating profit for 2025 was affected by a turbulent global trade landscape and ongoing uncertainty around U.S. biofuel policy. Resolutions “should support a more constructive operating environment for us in 2026,” he added.

Biofuel policy delay creates caution

The U.S. government has been slow to finalize some biofuels policies, a delay that has slowed use of feedstocks like the soybean oil produced at ADM processing plants.

ADM reported adjusted earnings for 2025 of $3.43 per share. Its 2026 adjusted earnings outlook of $3.60 to $4.25 per share hinged on those biofuel policies and whether slumping soy processing margins improve. The midpoint is less than analysts’ average estimate of $4.24 apiece, according to data compiled by LSEG.

Last month, Reuters reported that the Trump administration plans to finalize long-delayed 2026 biofuel blending quotas by early March, keeping them close to its initial proposal while dropping a plan to penalize imports of renewable fuels and feedstocks.

The delays have led biofuel makers and the suppliers of feedstocks like ADM to hold back on deals and delay spending decisions that shape output and margins.

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Ukraine is a major grain and oilseeds grower and exporter and the new system became operational on Dec. 1.

The government launched the plan to tackle price distortions linked to Russia’s invasion, which has seen an increase in domestic cash purchases of some agricultural products and their subsequent export at artificially low prices to avoid taxes.

In line with the new rules, minimum permissible export prices will be calculated on the basis of state customs service data, taking into account the terms of delivery for the previous month and using a 10 per cent discount.

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Traders did not expect a significant impact on grain shipments from the decision, saying measures to restrict grain exports have been announced in past years but had not had a major impact on shipments.

“The general opinion is that the minimum prices will not disrupt Ukraine’s export flows,” one European trader said.

“The expectation is that the minimum prices are being set so low that traders should be within their comfort zone and happy to continue sales. But we still need to wait to see if the government takes stronger measures.”

The farm ministry has already published the minimum prices at its website minagro.gov.ua and will refresh it on the 10th of each month.

The ministry also said that it has abolished the need for exporters to go through the vetting process and obtain licences to export food products.

The mechanism implied mandatory registration of an export company in a special agricultural register and, in the absence of such registration, the need to obtain a licence for each export operation.

– Additional reporting by Michael Hogan in Hamburg

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The EU executive arm said that during that period, Ukrainian wheat, maize, rapeseed and sunflower seed can be sold to any other of country of the 27-nation bloc, except to the five countries, which had complained the cheaper Ukrainian grain was making domestic production unprofitable.

The EU had earlier liberalized all imports from Ukraine to help the country’s efforts to fend off the Russian invasion. The five countries became transit routes for Ukrainian grain that could not be exported through the country’s Black Sea ports because of the war.

“The products can continue to circulate in or transit via these five member states by means of a common customs transit procedure or go to a country or territory outside the EU,” the Commission said.

With the Commission restrictions in place, Bulgaria, Hungary, Poland and Slovakia agreed to lift their unilateral bans for entry of Ukrainian wheat, maize, rapeseed and sunflower seed they had imposed earlier to protect their farmers.

The Commission’s measures also include a support package worth 100 million euros (C$149.95 million) for local farmers in the most affected five EU countries.

The Commission, which is responsible for trade policy in the European Union, said it could extend the grain import restrictions beyond June 5 if exceptional conditions continue.

— Reporting for Reuters by Jan Strupczewski.

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The heat is mounting on Brussels to work out a European Union wide solution after Warsaw and Budapest announced bans on some imports from Ukraine at the weekend, with other countries in eastern Europe saying they are also considering action.

Farmers say imports from Ukraine have lowered prices and reduced their sales. In Poland, the issue has created a problem in an election year for the ruling nationalist Law and Justice (PiS) party that relies on rural areas for much of its support.

“Ukraine needs help, but the costs of this help should be spread over all European countries, not just the frontline countries, especially Poland. We do not agree to this, because it harms our farmers,” Polish agriculture minister Robert Telus said after talks that began in Warsaw on Monday.

Kyiv said it aims to re-open food and grain transit via Poland as “a first step” to ending import bans, but Telus said that no solution had so far been found to guarantee that the grain in transit would not end up on the local market.

Some Black Sea ports were blocked after Russia’s invasion of Ukraine began last year and logistical bottlenecks trapped large quantities of Ukrainian grain, which is cheaper than that produced in the EU, in central European countries.

The Polish, Hungarian and Slovakian export and transit bans come as a deal to allow the export of millions of tonnes of Ukrainian grain via the Black Sea, despite the Ukraine war, nears its May 18 expiry. Meanwhile, Russian demands have left the prospect of an extension of this deal uncertain.

The combined impact of the bans and failure to agree an extension would strand millions of tonnes of grain inside Ukraine, a major agricultural producer that makes a substantial part of its gross domestic product from food sales.

“The first step … should be the opening of transit, because it is quite important and it is the thing that should be done unconditionally and after that we will talk about other things,” Ukrainian Agriculture Minister Mykola Solsky said before the talks in Warsaw.

To prevent any grain entering its market, Poland’s ban also covered transit through the country, which imported 2.45 million tonnes of grain, or three quarters of total imports, from Ukraine in 2022, Polish agriculture ministry data showed.

The bans have left truck drivers stranded for several days in long traffic jams on the border baffled.

“We can’t go in either direction. Yes, the Poles reached out to us, I’m very thankful to them. I’m immensely grateful, the whole of Ukraine is, the whole world even. But now, Poland doesn’t let (us) in for some reason,” Mykola Bervin, a driver from Zhytomyr in Ukraine, told Reuters.

Bervin said he had been stuck for three days and the tailback was more than 25 kilometres long.

EU action ‘inevitable’

Slovakia approved halting imports indefinitely following Poland’s move, although it maintained transit, while the BTA news agency reported that Bulgaria’s agriculture minister also said the country could limit imports.

Istvan Nagy, Hungary’s farm minister, said a solution was needed beyond the national level, calling eventual EU measures inevitable. The Czech Republic also urged an EU-wide solution while saying it would not introduce a ban itself for now.

Bulgaria, Hungary, Poland, Romania and Slovakia raised the issue with the European Commission last month, saying tariffs on Ukrainian imports should be considered, while states have also pushed for an EU purchase mechanism to buy up cheap grain.

Telus said that six countries would like to meet with the EU commissioner responsible for trade to find a solution.

A senior EU official said EU envoys would discuss Poland and Hungary’s bans on Wednesday – after the bloc’s executive said on Sunday that unilateral action was unacceptable.

The official said low global prices and demand meant grain was staying in the bloc rather than being sold on.

— Reporting by Pavel Polityuk in Kyiv, Andriy Perun in Rava-Ruska and Pawel Florkiewicz and Anna Koper in Warsaw, Gabriela Baczynska in Brussels, Boldizsar Gyori in Budapest, and Jan Lopatka in Prague; writing by Tom Balmforth, Jason Hovet and Anna Wlodarczak-Semczuk.

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Some of the world’s poorest nations were hardest hit by a spike in corn and wheat prices after Russia’s invasion of major grains producer Ukraine in late February, due to their reliance on imports and the large percentage of income consumers spend on food.

Now, Meyer said developing countries in North Africa and elsewhere could be the first to see some relief in prices at grocery stores, as commodity crops have fallen to pre-war levels and the North American crops develops.

“It is a more immediate effect. Lower commodity prices reduce the import bill of certain importing countries and can moderate some of what we’ve seen in relation to food price inflation,” Meyer said at an agriculture conference in Sao Paulo.

World food prices fell for a third consecutive month in June, but remained close to record high levels set in March, the United Nations’ food agency said earlier this month.

Meyer said in the United States there would be a bigger lag because food goes through more processing and complex supply chains. U.S. consumer prices accelerated in June as gasoline and food costs remained elevated, resulting in the largest annual increase in inflation in 40-1/2 years.

“Wheat, corn or rice make up a pretty small share of the food dollars that consumers spend,” Meyer said. “The more processed a product you have, the longer the lag in the transmission into food price inflation and the more sticky those output prices are for more processed commodities.”

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While the prices of mustard in Western Canada are still much higher than last year, they have been steady to lower over the past month. According to Prairie Ag Hotwire, the high-delivered bid for yellow mustard is at C$1.50 per pound, a decline of 41 cents from one month ago, but still a full dollar higher than last year.

The high-delivered bid for brown mustard has been steady at C$2.01/lb. from a month ago, but C$1.58 higher than at this point in 2021. Oriental mustard lost one cent this month, but gained 64 cents from the year before at C$1.00/lb.

Lionel Ector, president of Diefenbaker Spice & Pulse located near Elbow, Sask., said mustard growers should be pleased with this year’s crop.

“Mustard is a semi-arid type plant and that’s the weather conditions we’re getting currently,” Ector said.

In Statistics Canada’s March 2022 principal field crops report, Saskatchewan was projected to seed 345,500 acres of mustard seed in 2022, the most since 2018 and nearly 50 per cent more than in 2021. The province is the world’s largest producer of the yellow mustard variety.

Ector attributes the rise in acres to mustard’s high-rising prices from last year, but warns the rise in prices won’t be continuous.

“The supply chain doesn’t fill up overnight. There might be early pressure at harvest as farmers need cash flow, but Canada is the number-one exporter in the world and I think prices should be strong all year. How strong? I don’t know,” he said.

Processors may also have enough mustard seed with reduced demand causing a softening in prices, according to Ector.

“I think a lot of manufacturers or end users might have secured enough where they’re able to ration enough of their supply to meet their customers’ needs,” he said, adding that processing plants like old crop better because of more consistency in the manufacturing process.

Ector said that good amounts of precipitation are the reason why many crops are in good shape, but he fears another repeat of last year’s weather conditions.

“As soon as we get into more of our typical summer weather, things could go backwards quite quick,” he said.

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Despite a recent pullback, corn and soybean prices are well into profitability territory and have touched near the highs of 2012, when the Chicago Board of Trade corn price briefly went over $8, before falling to half that a year later. While it hasn’t hit $8 yet, it has been well over $7.

However, there are significant implications for farmers when crop prices rise relatively rapidly.

What do you do with more available cash? There’s equipment to be upgraded to increase efficiency. There’s always more land by which to be tempted. 

However, I’ve been through a few price jumps over my career now. The extra cash doesn’t last all that long due to a couple of reasons. The unpredictability of commodity markets means that you don’t know when the price of crops will drop quickly again. 

The phrase that high prices are the cure for high prices holds some truth. End markets will reach a limit to which they can pass on price increases and that leads to an attempt to find cheaper sources of a product, or in the crops world, the price will rise so that buyers of a certain crop can “buy acres”, which will inevitably lead to a decline in prices if successful in increasing production. 

Input costs often jump quickly after crop prices increase and it’s the time period between the price run up and the inevitable rise in input prices where farmers can make the most money. 

Farmers are price takers and so are at the mercy of suppliers who raise prices to get some of the increased funds flowing into the crop world. 

That’s an overly simplistic interpretation of what happens, as suppliers are also pushed by increases in their own prices during commodities rallies. They just have the ability to pass some of those costs onto farmers.

Luckily for farmers, the sale of the 2020 crop was at a time before the more recent escalation of input prices and a nice reward for their work.

There’s some evidence of irrational exuberance in farm country. There’s been a lot of extra activity in online farm equipment auctions and prices for equipment are way up. I’ve had a few jaw dropping moments lately looking at the price of equipment, especially certain tractor lines and planters.

Managing risk through forward pricing can be as important to business stability when the price is up as when it is down. Take profits when it makes sense and manage downside risk of price decline, although I know it’s highly tempting to wait for the highest prices. 

The proviso on celebrating good crop prices is that a rapid rise in crops means a rapid rise in feed costs for livestock farmers. 

Cattle prices have struggled their way back, getting closer to the five-year average after a steep drop in early 2020 due to pandemic-related plant closures across North America.

They certainly aren’t at the almost double the price of early 2020 that corn and soybeans have hit.

Hog farmers have seen a nice run up in price over the past year, however, although not to the levels of corn and soybeans. Milk prices don’t react quickly to input changes, although they will eventually.

When you’re celebrating the increase in crop prices, keep your livestock farming neighbours in mind.

Commodity prices are awesome when they go up, but they also will go down.

I don’t know what will burst this bubble, but it will likely have something to do with Chinese demand, which has been driving North American prices. African swine fever is fundamentally changing the way hogs are produced in China and the evolution isn’t finished yet. A move to larger farms drove an unsurprising increase in demand for protein meals, especially soybean meal, but now there’s concern in China about over-reliance on imports. We’ll see where it lands, but I expect there will be demand from China for a while yet.

When pricing reaches new plateaus there’s always talk of new normals. Will the price of a commodity trade within a new higher range? No one knows and that’s why managing price risk is important.

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Lean hogs also eased on profit taking, while feeder cattle also followed live cattle for a loss.

CME October live cattle futures fell 1.525 cents, to 108.35 cents/lb. (all figures US$). Most-active December cattle dropped 1.775 cents, to 110.825 cents.

CME January feeder cattle dropped 0.35 cent to 133.65 cents/lb. as rising grain prices translate to higher feed costs, cutting into profit margins.

“The trade believes we are out of the woods on these front-end cattle, with respect to the pushing back from the packer shutdown, but we aren’t through these cattle,” said Larry Hicks, CEO of CattleHedging.com. “Expect lower fed cattle prices and live cattle futures the balance of October.”

Hicks said heavier carcass weights are reminiscent of the end of 2015, when prices dipped and remained lower through the beginning of 2016.

“We’re not going to have the big first-quarter rally into April that everybody thinks we seasonally should,” he said.

Boxed beef prices gained, with choice cuts adding $1.15, to $215.21, and select cuts increasing $1.70, to $201.52.

Packer margins fell to $226.65 per head on Monday, down $73.10 from a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.

Meanwhile, lean hogs ended lower as profit-taking pulled back the market after five days of gains.

Chicago Mercantile Exchange October lean hogs advanced 0.05 cent to 78.175 cents/lb. Most-active December hogs settled 0.5 cents lower at 66.625 cents.

— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.

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Winter wheat yields were lower than the previous estimate but higher than last year. Corn and soybean yields were both up from the previous estimates and above last year. Private trade and industry trade estimates are above those of Statistics Canada.

Quick look

Soybeans: Chinese demand continues after typhoons in that country hurt crops.
Corn: Speculative funds continue to be in a long position, which could dampen demand.
Wheat: Eighty per cent of the 2020 Ontario crop should be milling quality, well up from 2019.

As of Sept. 22, most of the soybean crop had dropped leaves and harvest was in the early stages.

The bulk of the corn crop is mature with the black layer forming on about 80 per cent of the crop. The Ontario corn harvest will likely occur one week ahead of normal.

At the time of writing this article, Ontario winter wheat prices are up about 20 cents per bushel from early September; ethanol producers have increased their corn bids by nearly 40 cents per bushel and soybean prices are up nearly 80 cents per bushel.

This week, we’re advising farmers to increase their sales for corn and soybeans while we are waiting for additional upside in the Ontario wheat prices.

Chinese demand is coming in larger than anticipated for United States corn and soybeans. China’s corn and soybean crops suffered damage from three typhoons in the provinces of Heilongjiang, Jilin, Liaoning and the inner Mongolia region during late August and early September. China is also fulfilling Phase 1 of its trade commitments to buy U.S. agriculture commodities.

Wheat futures are incorporating a risk premium due to the uncertainty in production in Russia, Ukraine and Argentina. Drier conditions are a concern in the Black Sea region as farmers seed winter wheat.

September and October are typically bearish months for equity markets. The Canadian dollar has been highly correlated with the major stock indexes since the U.S. and Canadian central banks lowered their benchmark rates to near zero per cent to 0.25 per cent. The “risk off” sentiment has set a negative tone for the Canadian dollar. All major G10 currencies appear to be deteriorating against the U.S. greenback in late September.

Soybeans

Statistics Canada increased its Ontario soybean yield from 46.1 bushels per acre to 48 bushels per acre on its latest crop estimate. Production is now expected to finish near 3.7 million tonnes, unchanged from last year. Private trade and industry estimates range from 3.8 million tonnes to four million tonnes so we expect minor upward revisions on subsequent reports from Statistics Canada.

We estimate that China has bought about 32 million tonnes of U.S. soybeans, which is slightly more than 50 per cent of the U.S. Department of Agriculture projection for the 2020-21 crop year. Ideas are that China has covered its requirements through December while there is significant open demand January forward.

While China has been an active buyer, the speculative funds have also built a record long position in the soybean futures. This buying from China and the large speculators have occurred before the main U.S. soybean harvest.

The weather forecast looks favourable over the next couple weeks so we expect American farmers will be aggressive sellers during harvest. It now looks like the market has defined the upside potential in the short term. Brazilian soybean seeding is in the early stages in the southern regions. The soybean market will be very sensitive to growing conditions in South America over the winter.

What to do: We’ve advised Ontario producers to be 20 per cent sold on their 2020 production. This week, we’re advising producers to sell their second 20 per cent increment, bringing total sales to 40 per cent for the 2020 crop.

At the time of writing, the November soybean futures contract was trading at premium to the March and May soybean contracts. The market is telling the producer to sell now for immediate delivery.

We continue to look for an increase in soybean exports to non-Chinese destinations this fall. Fobbing capacity is filling up in the U.S. Gulf of Mexico and recent hurricanes have also stalled export loading. This market environment will enhance demand for Canadian soybeans during fall.

Corn

Statistics Canada increased its average yield by 1.2 bushels per acre from its previous estimate to 160.8 bushels per acre. Ontario corn production is expected to reach eight million tonnes, up from 8.6 million tonnes last year. Trade and industry estimates are slightly higher than Statistics Canada so we could see upward revisions of 200,000 to 400,000 tonnes on subsequent reports but this amount is negligible and would not influence markets.

We estimate that China has bought about 10 million tonnes of U.S. corn. Total U.S. export sales are coming in sharply higher than anticipated. U.S. ethanol production is lagging year-ago levels by approximately eight per cent, but we expect this to improve over the next month.

At the same time, cattle-on-feed inventories are above year-ago levels as the slaughter pace has not been sufficient to clean up the backlog of market-ready supplies in feedlots.

The speculative funds have covered their short positions and have a long of about 140,000 contracts (estimate as of close Sept. 18). It is important to note that at this stage, overall demand is not improving.

Over the next month, U.S. farmers are expected to harvest a record crop. We’ve seen a nice rally in corn but the upside is limited. Demand will decrease and supplies will increase moving forward, which will result in lower prices.

What to do: This week, we are advising Ontario producers to sell their second 20 per cent increment of the 2020 crop. We’re looking for Ontario export demand to improve from October through December with stronger demand from Europe.

Ontario ethanol production is expected to increase over the next month as well.

Finally, the Canadian dollar is expected to weaken. This should enhance Ontario basis levels.

Farmers in Ontario tend to increase sales during harvest but it’s relatively short-lived because of the small window. It’s prudent to increase sales given the recent rally in the futures.

Wheat

Statistics Canada decreased its average winter wheat yield projection by 1.2 bushels per acre from its earlier estimate to 82.9 bushels per acre. Production is now estimated to finish near 2.3 million tonnes, up from the 2019 output of 1.4 million tonnes.

Unlike 2019, we estimate that 80 per cent of the crop is milling quality. The domestic market has experienced limited upside despite the rally in the Chicago wheat futures over the month.

Strength in the domestic market is lagging world prices due to the larger Ontario supplies. The Ontario wheat market is functioning to encourage export demand.

We are looking for offshore movement to improve during November and December, which will drain the Ontario exportable surplus. World wheat values continue to percolate higher and Ontario wheat is competitive on the world market. The U.S. soft red winter wheat fundamentals will be historically tight for the second year in a row, therefore, we also expect steady exports to the U.S. throughout the crop year. We feel the downside in the Ontario market is limited.

Dryness in the Ukraine and Russia is a concern as the optimal seeding window narrows. European conditions are variable. France has experienced above-normal temperatures and certain regions have received below-normal precipitation.

U.S. winter wheat seeding is occurring under comfortable conditions. The Argentine crop will move through the critical head-filling stage over the next month and timely rains are needed to sustain yields.

Keep in mind the Canadian hard red spring crop was revised lower on the recent Statistics Canada report. Canadian spring wheat yields are not as good as earlier anticipated and the trade is looking for downward adjustments on the final crop report.

The world wheat market is incorporating a risk premium due to the adverse conditions affecting Northern Hemisphere winter wheat seedings. The only country that is in good shape is Australia where production will be up about 13 million tonnes from last year.

This crop will only come on the world market in January. In the short term, it looks like the world fundamentals are tightening, which should result in higher prices.

What to do: We’ve advised Ontario wheat farmers to be 20 per cent sold on the 2020 crop. We’re planning to make our next sales recommendation in late October or early November once the export demand improves.

The wheat market has a strong seasonal tendency to rally during October. This seasonal strength will be enhanced if the dryer conditions continue in Russia, Ukraine and France.

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But they said the extent was still limited and there were no signs importers were making especially large purchases to expand stocks.

“We are seeing bargain buying this week by countries which need grains and can make big savings by moving into the market,” one European trader said. “But inventories are not being expanded.”

The brisk international grain purchase tender market on Tuesday included Tunisia buying wheat and durum, South Korean buyers NOFI and FLC both purchased corn and Algeria bought barley.

Jordan sought wheat but failed to buy, while Egypt also issued a new tender for soyoil and sunflower oil. South Korea’s NOFI was also in negotiations about buying soymeal.

Chicago Board of Trade wheat futures on Monday dropped to a five-month low, soybeans fell to their lowest in nearly 10 months while corn dropped to a six-month low.

“It is a brisk mix of relatively small bargain-hunting as prices look very attractive,” another European trader said. “But the collapse in crude oil prices also appears to be making oil-producing countries cautious about spending extra money in these dramatic days.”

“I think we will see more of this bargain-hunting for comparatively small volumes of grains in coming days. People still need to eat and farm animals need to be fed despite the coronavirus uncertainties.”

“South Korea is one of the worst-hit countries by coronavirus but its importers are among the most-active grain buyers today.”

A European grain analyst also said he could not see current evidence of new stockpiling by grain importing countries and that some large recent purchases such as the 680,000 tonnes of milling wheat bought by Algeria on Thursday could also be explained by market reasons.

“Algeria made a big purchase for May shipment, but it’s difficult to say if it was because of concern about the coronavirus or as they’ve been running behind in their overall wheat purchases since the start of the season,” he said. “I think it’s more the latter reason.”

— Reporting for Reuters by Michael Hogan, additional reporting by Gus Trompiz.

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