Trade Tensions, Biofuel Uncertainty Hit Agribusiness Profits

By Ryan Hanrahan

Ongoing trade tensions and uncertainty about U.S. biofuel policy contributed to second quarter profits hitting multi-year lows for a number of crop trading companies — including Archer-Daniels-Midland and Bunge Global SA — while ag equipment manufacturers warned those trade tensions will begin increasing equipment prices in the second half of the year.

Reuters’ Karl Plume and Katha Kalia reported that “Archer-Daniels-Midland posted its lowest second-quarter profit in five years on Tuesday as U.S. trade upheaval and uncertainty around biofuel policies slowed sales and crimped trading and crop processing margins.”

“The company warned that full-year 2025 adjusted earnings would drop to around $4.00 per share, the lowest since 2020, after a weak first half with ongoing global trade challenges,” Plume and Kalia reported. “But ADM forecast a better operating climate later this year as recent U.S. government proposals to increase biofuel use and support domestic feedstocks were poised to boost crop processing margins and sales, sending its shares up as much as 5.3%.”

“Chicago-based ADM is bracing for the impact of U.S. President Donald Trump’s sweeping tariffs on most imports, and any trade retaliation which often targets agricultural products,” Plume and Kalia reported. “ADM and agribusiness peers including Bunge and Cargill have reported eroding profits in recent quarters due to ample global crop supplies and thinning margins. Trump’s tariff threats and shifting deadlines for duties have fueled further chaos for global grains merchants like ADM.”

Bloomberg’s Gerson Freitas Jr and Erin Ailworth reported that, for the second quarter of 2025, “Bunge reported adjusted earnings of $1.31 per share for the three months ended in June, the lowest since 2018 for the period, according to a statement. That still exceeded the $1.11 average of analyst estimates compiled by Bloomberg, as the company benefited from better-than-expected processing results in South America.”

“Bunge Global SA is (now) banking on its newly completed Viterra Inc. acquisition to help revive profits after reporting its worst second-quarter results in seven years,” Freitas Jr. and Ailworth reported. “The agribusiness giant is ‘moving quickly’ to identify potential cost savings and other efficiency gains across the combined operations, according to Chief Executive Officer Greg Heckman. The pledged benefits of the $7.3 billion transaction, which was announced two years ago, ‘hold true today and are especially relevant as we navigate the current macro environment,’ he said on an earnings call Wednesday.”

Ag Equipment Companies Say Tariffs Likely to Begin Increasing Prices

Bloomberg’s Michael Hirtzer reported that “farmers will soon start feeling the impact from President Donald Trump’s tariffs in the form of higher prices for the machines used to plant, treat and harvest fields. That’s the warning from AGCO Corp. and CNH Industrial NV. With duties on the rise, the equipment makers will increasingly be forced to pass along the extra costs — both to farmers in the US and to those elsewhere in the world.”

“For instance, some of AGCO’s high-end Fendt tractors and combines are built in Europe, where the EU bloc accepted a 15% tariff on most of its exports to the US. Rather than letting the price of one model spike, AGCO is instead moving to smooth it out across its offerings,” Hirtzer reported. “‘We have a pile of costs that we’ve got to absorb somehow, and we look to sprinkle it wherever we can, all around the world on all products,’ AGCO Chief Executive Officer Eric Hansotia said in an interview.”

Reuters’ Abhinav Parmar reported that “farm and construction equipment maker CNH Industrial expects a muted finish to the year due to tariff impacts, despite posting second-quarter results above expectations on Friday. The Basildon, UK-based company said most units sold in the second quarter had limited impact from additional tariffs.”

“The effects will come through more in the second half of the year as tariff-affected inventory flows through the production system, CFO James Nikolas said,” Parmar reported. “CEO Gerrit Marx said in a post earnings call that much will depend on the scope and timing of U.S. tariffs and how trade partners respond.”

“CNH plans to offset future tariff costs through more price hikes and cheaper sourcing. It expects 2025 sales to drop below last year’s levels, but reaffirmed its annual forecasts,” Parmar reported. “While the company is now tracking ahead of its full-year guidance, tariff impact is weighted to the second half of the year, Oppenheimer analyst Kristen Owen said.”

Trade Tensions, Biofuel Uncertainty Hit Agribusiness Profits was originally published by Farmdoc.