Archer-Daniels-Midland Company
Analysis
ADM spent 2025 in a policy-made trough and has spent 2026 climbing out of it: after the EPA set renewable fuel volumes in March, margins came back and guidance was raised twice in three months. Sweeteners and starches never recovered. How much of the 2026 guidance raise came from policy, not operations?
- Biofuel policy, not cost cuts, is what turned this business.
In Q3 FY2025 crush barely earned anything and the year was cut. Once the EPA set renewable fuel volumes in March, crush and ethanol margins came back and 2026 guidance was raised twice, so ADM rides policy timing rather than sets it. What crush margin does the raised guidance assume for the rest of 2026?
- Nutrition is finally improving on its own.
Flavors grew in every region and Decatur East is back after 18 months down, letting Specialty Ingredients win customers back. Natural colours is next: a US market near $1 billion where ADM wants a tenth as profit. How much of Nutrition's profit gain came from Decatur East shipping again?
- Sweeteners are shrinking and ethanol is hiding it.
Liquid sweetener volumes keep falling as shoppers buy less packaged food, and the corn mills that make them carry higher energy and chemical costs. Strong ethanol keeps Carb Solutions flat, but nothing yet fixes the consumer side.
- Biofuel policy sets crush marginsThe bull case is that finalized biofuel mandates make soybean oil a policy-supported market, so crush margins rise with the mandate, not with ADM's selling.
- Nutrition recovery and flavorsFlavors growth and the return of the Decatur East plant are meant to restore Nutrition to steady margin expansion after two years of disruption.
- Cost savings fund expansionCost savings and cash discipline are meant to fund crush and ethanol capacity additions at existing plants, so growth does not require large new spending.
- Policy timing outside ADM's controlThe bear case is that the earnings improvement depends on government decisions about mandate volumes, and ADM books most of its crush forward before those decisions arrive.
- Sweetener and starch demand declineConsumer demand for liquid sweeteners and starches keeps shrinking, and ethanol strength is being asked to cover a shortfall ADM cannot fix by itself.
- Rising plant and energy costsManufacturing, energy and packaging costs have risen faster than ADM can offset them, so part of any margin gain is absorbed before it reaches profit.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Purchase | ≥$15K | Jul 23 | Sep 22 |
Donald Trump Republican · Executive | Sale | ≥$15K | Jun 12 | Aug 22 |
Donald Trump Republican · Executive | Purchase | ≥$1K | May 15 | Jul 1 |
Donald Trump Republican · Executive | Purchase | ≥$15K | May 11 | Jul 1 |
Ro Khanna Democratic · House · CA-17 | Sale | ≥$1K | Jun 2 | Jul 6 |
Congressional trading data provided by QuiverQuant
How Archer-Daniels-Midland Company turned $80.3B of revenue into $1.4B of operating income.
| Revenue | ||
|---|---|---|
| Ag Services and Oilseeds | $61.6B | ▼ 7.43% YoY |
| Carbohydrate Solutions | $10.7B | ▼ 4.42% YoY |
| Nutrition | $7.5B | ▲ 2.22% YoY |
| Total revenue | $80.3B | |
| Gross profit | $5.0B | 6.3% |
| Operating income | $1.4B | 1.8% |