Global agricultural supply chain manager and processor Archer Daniels Midland lowered its full-year 2025 outlook, citing the deferral of US biofuel policy and a challenging global trade environment Nov. 4.

In the third quarter ended Sept. 30, the company's agricultural services and oilseeds segment's operating profit fell 21% year over year to $379 million, driven by compressed margins and delayed demand signals, the company said Nov. 4.

Despite improved oilseed processing volumes and record export activity, the company's profitability has been undermined by persistent policy uncertainty that is deterring long-term commercial commitments from farmers and customers across the agricultural supply chain.

The agricultural services and oilseeds segment is ADM's largest revenue stream, typically accounting for approximately 70%-80% of the company's revenue.

In the third quarter, ADM's processed oilseed volumes rose 4.6% to 8.803 million metric tons, according to the company's financial statement.

During the earnings call, CEO Juan Luciano called the agricultural services and oilseeds business "significantly impacted" by the short-term environment but noted, "We believe progress on this front will drive significant biofuel and renewable diesel demand and lead to elevated pricing, volumes and margins."

While oilseed processing volumes rose in Q3, muted demand, due to the deferral of US biofuel policy and challenges with international trade flows, cut the operating profit of its crushing subsegment by 93% to $13 million in Q3, compared to $187 million in Q3 2024, ADM said.

CFO Monish Patolawala noted this was driven by "significantly lower" global soybean and canola crush execution margins, which were "down most significantly in North America."

In contrast, the agriculture services subsegment achieved record export volumes with operating profit surging 78% year over year to $190 million, driven by robust North American export activity in corn and meal during a robust harvest season.

This performance was offset by the refined products subsegment, where operating profit declined 3% to $120 million, as biodiesel margins faced sustained pressure from both the deferred biofuel policy and evolving international trade dynamics, particularly reduced demand in North America.

The weakness also hit ADM's refined products and other subsegments, which include biodiesel. Its operating profit fell 3% to $120 million, as positive timing impacts were offset by "lower biodiesel and refining margins" stemming from the policy delays.

The US Environmental Protection Agency has yet to finalize the Renewable Volume Obligation rule for 2026. A proposed rule was released on June 13 and is currently undergoing review after the public comment process ended Oct. 31.

EPA's 2026 Renewable Volume Obligations, which were earlier set to be finalized by Oct. 31, significantly boost soybean oil demand for biodiesel and aim to limit imported fuels and feedstocks, favoring domestic soybean producers.

However, the partial government shutdown that started on Oct. 1 and the clashes between biofuel and petroleum groups over compensating for previous small refinery exemptions have delayed the timeline for the mandate and created uncertainty among market players.

This uncertainty has been directly reflected in market volatility. Luciano explained that after the RVO was announced, soybean board crush margins "rally sharply" to around $2.25, but have since fallen, turning "into something like $1.20 and now currently bounce back to about $1.50."

The deferral of US biofuel policy decisions, particularly regarding renewable fuel blending requirements under the Renewable Fuel Standard, has restrained demand for soybean oil and other feedstocks, ADM said.

"In crush, the big problem we have is this oil leg that is relatively soft right now," Luciano said, contrasting it with the "other leg, meal, [which] has been very strong."

This market uncertainty has also frozen physical trading, according to Luciano. "Right now, both farmers and customers are very reluctant to book long. So farmers are kind of selling reluctantly and buyers are kind of hand to mouth."

Looking ahead to the fourth quarter of 2025, management indicated that approximately 80% of crush volumes are already booked at current depressed margin levels, suggesting limited upside potential from spot market improvements through year-end.

Global soybean crush margins are expected to remain in the "current range" according to the company, noting a rebound from earlier-quarter lows of approximately $1.20/bu crush to around $1.50/bu, but still well below previous guidance of $60-$70/mt for the second half of 2025.

The company expects continued softness in both global soybean and canola crush execution margins in Q4.

ADM said these headwinds are expected to persist into the Q4, prompting the company to revise its full-year guidance downward.

The company is "expecting continued softness in global soybean crush margins" for Q4, a significant "step down" from Q2 expectations when ADM forecasted margins in the "$60-$70/mt" range, CFO Monish Patolawala said. Luciano added that ADM's crush book is already "about 80% of Q4" locked in at these lower margins.

For 2025, ADM now expects adjusted earnings of $3.25-$3.50/share, down from its earlier forecast of around $4.00/share.

Despite the short-term pain, ADM outlined a clear sequence for a potential recovery once policy is finalized. "You can see a scenario in which RINs will probably pop first," Luciano explained. "RINs need to climb to allow renewable diesel plants to have margins ... That in line will pull on more demand for soybean oil. That, in turn, will demand for us to crush more... which increases crush margins."

"Overall," Luciano concluded, "the recent progress with the trade deal with China, coupled with our expectation of gaining US biofuel policy clarity within the next several weeks or months is an encouraging setup for next year. We expect 2026 will offer a more constructive environment."

Platts, part of S&P Global Commodity Insights, assessed China Soybean Gross Crush Margin $/mt at minus $38.48/mt on Nov. 4 , down $2.53/mt day over day.

Platts SOYBEX FOB New Orleans for December shipment was last assessed at $452.77/mt on Nov. 3, $6.98/mt up from Oct. 31.