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a day ago
- Business
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ADM sets off 'frenzy' in US soybean market ahead of new biofuel blend rule
By Tom Polansek and Karl Plume CHICAGO (Reuters) -Archer-Daniels-Midland, a major U.S. soybean crusher and biofuel producer, slashed its bids to buy the oilseed this week ahead of an expected Trump administration announcement on biofuel blending requirements, a primary driver of demand for soybean oil. Processors such as Chicago-based ADM have been waiting for the U.S. Environmental Protection Agency's decision on blending requirements for months as they grapple with slumping crush margins and abundant soybean stocks. Reuters reported on Thursday that the EPA is expected to propose blending requirements below industry recommendations on Friday, leading to lower-than-expected demand for soyoil to be used in biofuels. ADM said in an emailed statement to Reuters on Thursday that it does not have insight around the pending blending announcement beyond publicly available information and that it independently sets its basis bids, which is the difference between futures and a local cash price to take possession of the grain immediately. The company on Wednesday rolled its cash basis bid at its flagship Decatur, Illinois, facility to 20 cents below the Chicago Board of Trade November soybean futures price from 22 cents over July futures. The roll to November futures, which closed at a 15-cent discount to July on Thursday, lowered the local cash price by about 60 cents a bushel, representing an unusually sharp 6.5% drop in the price offered to farmers. ADM also rolled basis bids at its other crushing facilities, and some rival processors, including Cargill, followed ADM on Thursday. Other processors kept their basis bids against the July futures contract, but lowered basis values by up to 15 cents. "ADM Decatur put the bean market in a frenzy," agriculture trading company John Stewart and Associates said in a note. Falling basis values reflect expectations for a large autumn harvest and weak demand that has eroded processing margins for companies that crush beans into soymeal livestock feed and soyoil used for cooking and producing biofuels. Crush margins have struggled as a recent jump in U.S. processing capacity has swelled available supplies of meal and oil and pressured prices for the soy products. Tariff worries and unclear U.S. biofuels policies have stoked further unease among crushers and biofuel makers, and some biodiesel producers have scaled back or idled plants. ADM said in April it would permanently close a South Carolina soybean processing plant to cut costs. "Cash crush margins stink, and there is a bunch of downtime scheduled for July," said Charlie Sernatinger, executive vice president for Marex Capital Markets. Diana Klemme, vice president of Grain Service Corp in Atlanta, which serves agricultural hedgers in the futures markets, sent an alert to customers after seeing ADM's bid adjustments. She said that she had never seen a move to new-crop basis levels in June in more than 50 years in the grain business. "I said check your markets carefully because ADM just dropped all their bids 40-75 cents a bushel and went to new-crop values," Klemme said. The November futures contract represents the autumn harvest price, or the new crop. Farmers have been reluctant to sell crops to processors because they want higher prices, while processors avoided raising bids to protect their thin margins.
Yahoo
17-04-2025
- Politics
- Yahoo
Trump funding freeze upends agricultural research at US universities
By Karl Plume and P.J. Huffstutter DAVIS, California (Reuters) - From its earliest days in 1906, when the University of California secured a small stretch of fertile soil in the state's Central Valley, a quiet promise took root - that this place, originally called University Farm, would someday grow mighty. For decades, UC Davis stood tall among the world's giants in agricultural research. All that changed in a few short days amid a sweeping overhaul of the federal government as the Trump administration froze funds, closed down labs and shut out scientists' ability to secure grants for future research. Poultry genetics research was shut down, fruit and vegetable test plots went unwatered, and work to help small farms insure against crop loss was handed off to partners overseas as federal support, by far the largest pool of funding, evaporated. Collectively, millions of dollars in funds from the shuttered United States Agency for International Development disappeared and U.S. Department of Agriculture and other federally backed grants were frozen, while broad new administration rules regarding diversity crippled crucial science on food security and climate resilience at one of the nation's top agriculture schools. The moves at UC Davis and other land-grant universities have halted farm-related research projects midstream, according to interviews with more than a dozen agricultural researchers, professors and economists. "U.S. universities, they're really a model for the world," UC Davis economist Michael Carter told Reuters. "What's at risk of being lost is stuff that can make a difference in the lives of lots and lots of people." Future food and farm research is also in jeopardy with new federal grants tied up in lawsuits winding through the courts. And Davis risks having to turn away graduate students this fall: There simply may not be funding for jobs at the scaled-back labs. The university has not rescinded admission offers to students who submitted a statement of intent to enroll, UC President Michael Drake told Reuters. But some graduate programs have moved students who have not accepted their offers to waitlists due to the funding uncertainty, he said. Federal grant awards and proposals to Davis totaled about $2.75 billion in fiscal 2024, eclipsing $1.83 billion in funding from state grants, private and non-profit contributions, according to UC data. The university said it did not have an estimate for the recent cuts because Trump's executive orders are still being litigated. The White House said in a statement to Reuters that Trump's actions would allow for "more critical research, not less, while cutting bureaucracy, bloat, and programs that do not align with the America First agenda," but did not elaborate further. The State Department, in a statement to Reuters, said its actions were aimed at aligning its programs with the administration's foreign policy priorities and ensuring tax dollars are spent in the national interest. The USDA did not respond to a request for comment. Money remains frozen while the Trump administration considers appeals of court orders blocking its freeze on $3 trillion in federal grants, loans and other financial aid. The aftermath has left everyone here shaken. PANIC ATTACKS On a recent morning, researcher Tara Chiu awoke at 3 a.m., as she has every day since a USAID notice arrived, terminating her work helping poor farmers manage market and climate risks. The emailed notice from USAID Agreement Officer Olivia Ricks, reviewed by Reuters, said the work was "not aligned with agency priorities" and "not in the national interest." "I've had a panic attack every night," Chiu said. "I feel like my entire torso is being crushed." She and her boss Carter, the economist, relied on USAID funding for research that helps small-scale farmers escape poverty traps. Their appeals to the State Department to remain open went unanswered. The lab's $4.3 million in USAID funding remaining from a nearly $22.6 million, multi-year grant is unlikely to be restored, Carter and Chiu said. The State Department did not respond to a request for comment on the matter. Across the Davis campus, Erin McGuire's USAID-funded horticulture lab, will also shut down at the end of April. The lab is renowned for tackling some of the world's most pressing questions, including how to feed a growing global population while climate change threatens farmers' ability to grow food. As the deadline nears, McGuire is scrambling to hand off management of fruit and vegetable test plots overseas to research partners there while also tackling a mound of paperwork required to close out any research project, a process that would typically take up to six months. McGuire's work cultivated drought-resistant tomatoes and ways to kill produce-eating pests and control toxic fungi. It helped the United States remain a leader in agricultural technology even as rivals like China and Brazil ramped up public investment in their own research. Two time zones to the east, University of Illinois researcher Peter Goldsmith laid off 30 staff and will shutter his Soybean Innovation Lab this month. His research into soybean cultivation in hotter, drier climates was aimed at making soybeans the industry standard for vegetable oil worldwide, opening up future markets for U.S. producers in the coming decades. The three labs were among 17 lead labs and dozens of collaborating labs at universities across the country within the USAID-funded Feed the Future Innovation Labs program created in 2012. FOLLOWING THE MONEY The U.S. government's funding of agriculture research was slumping even before the Trump cuts, falling by about a third over the past two decades, according to USDA data. According to the agency's Economic Research Service (ERS), funding levels for public agriculture research and development were around $5 billion annually in 2020 - or about the same level as in 1970, when adjusted for inflation. How much private investment offset this drop is not known, ERS said. Meanwhile, top farm goods importer China and major exporter Brazil have poured money into such research, with China becoming the largest funder of agricultural R&D in the world, ERS said. If U.S. government funding of public R&D continues its decline, U.S. farmers would see lower crop yields as climate pressures intensify by midcentury, Cornell University and University of Maryland economists and an agricultural ecologist at Stanford University wrote in a Proceedings of the National Academy of Sciences journal paper published in March. If farm productivity drops, the likelihood of government aid bailouts increases, the researchers said. During the first Trump administration, farmers received about $217 billion in crop support, disaster and other aid programs, including some related to COVID and his trade war with China - more than in any four-year period since 1933 when adjusted for inflation, according to a Reuters examination of USDA data. Now, the Trump administration is deciding whether to bail out farmers damaged by the current tariff backlash - even as research programs that benefit them are shuttering. Kevin Bellido, manager at the UC Davis avian research and teaching facility, was already concerned that bird flu that has decimated poultry flocks across California would find its way into his research barns. Now, he worries that suspensions of federal grants would deprive the 18-acre research facility of projects like one aimed at identifying birds that are genetically more resilient against Newcastle disease, which spreads similarly to avian flu and is equally deadly. "If we get our funding cut, we basically wouldn't have anything to teach students," he said over deafening rooster crows from a nearby barn housing a half dozen breeds, including the heat-tolerant and more disease-resilient Egyptian Fayoumi. The funding uncertainty is beginning to ripple across the Davis campus in other ways. Allen Van Deynze, director of the seed biotechnology center, relies on federal and private grants to fund his work to develop more disease-resistant spinach and easier-to-harvest peppers. His federal grants were spared in the wave of cuts, but that funding only runs through June. Van Deynze said he is unable to apply for new federal grants because the government's online grant request platform has been frozen. "Nobody's taking students this fall," he said, "because nobody knows if they'll have money."
Yahoo
27-03-2025
- Business
- Yahoo
ADM CEO's 2024 compensation dips amid accounting issues, job cuts
By Karl Plume CHICAGO (Reuters) -Archer-Daniels-Midland Co CEO Juan Luciano earned $21.6 million in 2024, down from $24.4 million the prior year, a securities filing on Tuesday showed, as the U.S. grains trader faced accounting problems and cost pressures that triggered layoffs and sent its shares plummeting. The Chicago-based company was forced to revise six years of financial statements early last year and further restate some earnings later in the year after an internal investigation into its financial reports. The accounting woes also cost former Chief Financial Officer Vikram Luthar his job and triggered two federal 2024 compensation included a slight increase in base salary to $1.493 million and company stock awards valued at $17.7 million, according to ADM's annual proxy statement filed with the U.S. Securities and Exchange Commission. The top executive's annual incentive plan award fell to $1.2 million, down from $3.6 million the prior year and about 40% of his 2024 target of nearly $3 million, as company earnings and returns on investment fell below preset goals. ADM in February posted its lowest fourth-quarter adjusted profit in six years and warned of a tough 2025 due to slumping margins and U.S. biofuel policy uncertainty. The company also began layoffs in a broader cost-cutting push to save $500 million to $700 million over the next three to five years. Reuters exclusively reported that ADM began a fresh wave of job cuts this week targeting its agricultural services and oilseeds division, the company's largest unit. ADM shares are down 32% since news of the accounting issues broke in January 2024, sending its market cap plunging to around $22 billion from nearly $37 billion previously, according to LSEG data. Sign in to access your portfolio
Yahoo
05-02-2025
- Business
- Yahoo
Bunge Q4 profit drops on weak oilseed processing margins
By Karl Plume (Reuters) -Agricultural commodities trader Bunge Global posted lower than expected fourth-quarter profit on Wednesday as weak oilseed processing margins in key markets dragged down results in its core agribusiness segment. The company said its processing business would remain under pressure in 2025 due to weak margins and a challenging economic environment, with global trade tensions and biofuel policy uncertainty creating headwinds for crop traders. The struggles come as Bunge is working to close a deal to acquire grain handler Viterra, a merger that would create an agribusiness powerhouse closer in size to its peers Archer-Daniels-Midland and Cargill. Bunge said regulatory approvals for the deal were in the late stages. Bunge shares were down 4.3% before the bell. The company has seen profits erode as a global glut of staple crops like soybeans and corn dragged prices to four-year lows last year, whittling down margins. ADM on Tuesday posted its lowest fourth-quarter profit in six years and said it was slashing costs and cutting jobs, joining Cargill in tightening its belt. Bunge's agribusiness segment, which represents over 80% of its total revenue, saw adjusted core earnings decline to $364 million in the fourth quarter from $639 million a year earlier. Adjusted earnings in the processing sub-segment tumbled nearly 60% due to lower soybean crushing results in North and South America and weak softseed markets in Europe. Bunge's refined and specialty oils unit's adjusted profit dropped 25% due in part to U.S. biofuel policy uncertainty. Bunge forecast adjusted earnings to be $7.75 per share in 2025, down from an adjusted annual profit of $9.19 per share in 2024 and missing analysts' expectations of $8.71. The Missouri-based company posted an adjusted profit of $2.13 per share in the quarter ended Dec. 31, down from $3.70 in the same period a year earlier and below the consensus analyst estimates of $2.24, according to data compiled by LSEG. Sign in to access your portfolio
Yahoo
31-01-2025
- Business
- Yahoo
Trump tariffs to stoke US food inflation despite pledge to lower costs
By Karl Plume, Tom Polansek and Renee Hickman CHICAGO (Reuters) - U.S. consumers grappling with soaring prices for beef and eggs will face even higher costs for meat, vegetables and fruit if President Donald Trump imposes tariffs on Canadian and Mexican imports, economists and food industry executives said. Consumers have struggled with high inflation since the COVID-19 pandemic and voted for Trump in part due to discontent with higher prices. Trump pledged to bring down costs for ordinary Americans. See for yourself — The Yodel is the go-to source for daily news, entertainment and feel-good stories. By signing up, you agree to our Terms and Privacy Policy. The White House said on Friday that the new tariffs on Canada and Mexico will take effect on Feb. 1, denying a Reuters report that they would be delayed until March 1. Tariff-related price increases would hit consumers' wallets at a time when beef prices are near record highs and costs for eggs have climbed after bird flu eliminated millions of egg-laying hens. Bird flu cases in dairy cows have also reduced milk output in top-producer California. Shortly after taking office last week, Trump set the Feb. 1 deadline for imposing 25% tariffs on imports from Mexico and Canada unless the countries move to halt flows of illegal immigrants and the deadly opioid fentanyl into the U.S. He also said he would impose a 10% tariff on Chinese goods over that country's role in the fentanyl trade. "Any increase in expenses in the form of a tariff subsequently serves as a 'food tax' on consumers for imported products and is not a workable solution," National Grocers Association spokesman David Cutler said. Tariffs are paid by importers, not exporters, who either pass on the costs to consumers or face lower profits. The Trump administration says its planned tariffs will not cause higher prices in the U.S. Vice President JD Vance said on Sunday that consumer prices will start coming down, but it might not happen immediately. Supply disruptions due to tariffs would highlight how reliant the nation has become on its neighbors for feeding its population. The United States imported $195.9 billion of agricultural goods from suppliers around the world in 2023, according to U.S. Department of Agriculture and U.S. Customs data. That included nearly $86 billion from Mexico and Canada, the top two suppliers representing 44% of the total. Up to 40% of fresh produce sold in U.S. food stores is imported, according to the National Grocers Association "We import most of our fresh fruit and vegetables from Mexico and Canada so you will definitely see inflation on those products," said Rob Fox, an economist and director of CoBank's Knowledge Exchange. "These are products that are not easily replaced," he said. "I can't go out and plant tomatoes in Illinois in January and hope to replace them." About two-thirds of U.S. vegetable imports and half of its fruit and nut imports come from Mexico, according to the USDA. That includes nearly 90% of its avocados, as much as 35% of its orange juice, and 20% of its strawberries. Avocados from Mexico, a marketing arm of Mexico's avocado industry, was shipping 52 to 53 million pounds of avocados each week to the U.S. in December, CEO Alvaro Luque said. That climbs to more than 70 million pounds ahead of the U.S. Super Bowl football game which this year is on Feb. 9, he said, highlighting America's demand. The threat of tariffs alone can be inflationary, said David Ortega, an economist at Michigan State University. "Food companies are scrambling to come up with contingency plans in terms of where they might source these products should these tariffs come into place, and that adds cost to their operations," he said. HIGHER BEEF PRICES The U.S. normally imports more than 1 million cattle from Mexico annually, though Washington has blocked shipments since late November due to the discovery of a pest in Mexico. Canadian cattle also are shipped into the U.S. to be fattened and slaughtered. Tariffs or trade disruptions could affect products ranging from ground beef to steaks, analysts said. Uncertainty over tariffs has encouraged U.S. meat buyers to lock in purchases of domestic supplies or imports before Feb. 1, said Bob Chudy, a consultant for beef importers. "If it goes through anything like threatened, it will definitely push U.S. beef prices up significantly higher," he said of tariffs. U.S. retail prices for ground beef hit a record high of $5.67 per pound in September and were a little below that last month, according to the Bureau of Labor Statistics. Prices for the hamburger meat are up 42% from four years ago. U.S. beef demand hit a 38-year high in 2024 despite record prices, said Lance Zimmerman, senior animal protein analyst for RaboResearch Food & Agribusiness. An increase in imports and heavier cattle weights have compensated for smaller domestic herds. U.S. cattle inventories dropped to their lowest in decades after drought reduced grazing lands. It takes roughly two years to raise a new cow to be ready for slaughter. "Beef prices are high right now and trade disruptions can introduce some chaos into the markets," Zimmerman said.
