Archer-Daniels-Midland Company

ADM · NYSE · USD

Will finalized U.S. biofuel policy lift ADM's crush and ethanol margins enough to outrun weak sweetener demand and higher plant costs?

Last 4 earnings calls · through Q2 FY2026

Bull case

  • Biofuel policy sets crush margins

    The 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 flavors

    Flavors 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 expansion

    Cost savings and cash discipline are meant to fund crush and ethanol capacity additions at existing plants, so growth does not require large new spending.

Bear case

  • Policy timing outside ADM's control

    The 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 decline

    Consumer 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 costs

    Manufacturing, energy and packaging costs have risen faster than ADM can offset them, so part of any margin gain is absorbed before it reaches profit.

  • Commodity timing swings

    Reported profit moves with mark-to-market timing on hedges and inventory, which can hide or exaggerate the underlying earnings of the business.

Bull and bear points

Growth & Execution

In short: Crush and ethanol volumes are rising, while sweetener and starch demand keeps shrinking.

Bull · 2

  • Full-year guidance raised twice within four months

    Management lifted its 2026 earnings range in May and again in August, pointing to the biofuel margin environment and better plant execution as the reasons.

    Tone shiftQ4 FY2025 → Q1 FY2026

  • Capacity added at existing plants costs a quarter of new build

    Management screened ten U.S. crush sites for debottlenecking and started with four, which adds volume without the cost and permitting of a new plant.

    Q2 FY2026 call
Bear · 2

  • Liquid sweetener volumes keep falling with consumer behavior

    Volumes are down as households adopt weight-loss drugs and buy less packaged food, and ADM can only partly offset that by shifting corn into industrial starch uses.

    Q4 FY2025 call

  • Decatur East customers have not fully returned

    The plant was offline for about eighteen months and buyers signed elsewhere, so Specialty Ingredients volumes recover slowly even with production restored.

    Q1 FY2026 call

Profitability & Financial Strength

In short: Margins expanded on crush and ethanol, but cash flow and reported profit swing with commodity timing.

Bull · 2

  • Gross margin widened as crush and ethanol prices improved

    Gross margin rose to 8.5% in the second quarter of 2026 from 6.5% a year earlier, showing the policy lift reached physical margins and not only accounting marks.

    Filed financials

  • Clean fuel credit estimate raised to about $250 million

    Management more than doubled its expected 2026 benefit from the 45Z credit as it documented carbon intensity plant by plant and met wage requirements.

    Tone shiftQ1 FY2026 → Q2 FY2026
Bear · 1

  • Free cash flow is less than half its level a year earlier

    Free cash flow over the last twelve months was $1.7 billion against $4.1 billion a year before, so dividends, buybacks and expansion all depend on margins recovering.

    Filed financials

Market Position

In short: ADM's crush and ethanol footprint is hard to replicate, but mandate and trade decisions set its margins.

Bull · 2

  • China's purchase commitment supports North American exports

    Management assumes China keeps buying U.S. soybeans under a 25 million ton commitment, which underpins Ag Services results and export volumes through 2026.

    Q2 FY2026 call

  • Global asset network captures dislocation-driven trading

    The Barcarena terminal in Brazil returned to full operation and the trading desk gained on shifting trade flows, showing the footprint earns when supply routes change.

    Q2 FY2026 call
Bear · 2

  • Crush margins depend on the size of the EPA mandate

    Management names the final mandate volume and the small-refinery exemption offset as the largest swing factors for margins, and neither is decided by ADM.

    Q4 FY2025 call

  • Energy and geopolitical shocks raise operating costs

    Higher oil prices tied to Middle East conflict raise ADM's energy and packaging costs, working against the same biofuel margins that lifted recent results.

    Q2 FY2026 call