The biofuel boom in the US is a result of the war with Iran.
The soaring crude oil market has pushed soybean oil to its highest level in over a year. This is a boon for oilseed processing companies?like Archer Daniels Midland and Bunge Global, who have seen North American crush margins soar to their highest levels since Russia invaded Ukraine 2022. This windfall supports profits for agribusinesses, and takes the sting away from rising energy costs to process and ship grain as well as global trade disruptions caused by tariff wars and the Iran War. Some analysts are raising their profit forecasts for 2026, citing the two largest grain traders who will also be benefitting from the higher biofuel blend mandates that were released last month by the US Environmental Protection Agency after a long delay.
Bunge will report its results for the quarter on Wednesday. ADM will follow next week.
Both companies will likely report lower earnings in the first quarter compared to their strong profits a year ago. They are likely to increase their profit guidance for 2026 due to a'strong oilseed processing outlook' and the EPA biofuel mandate, which has removed the uncertainty that weighed on the results of recent quarters.
Heather Jones, an analyst at Heather Jones Research, said that these factors were realized late in the first quarter and reflect "a jaw-dropping improvement" in North America.
Jones increased her Bunge earnings-per share estimate to 95 cents for the first quarter from 92.03 cents, and raised her outlook for 2026 to $9.15 from $8.03 cents. Her 2026 profit forecast for ADM rose from $3.98 to $4.36 per share, but special items were seen as dragging down the first-quarter results.
Stephens Inc. raised its first quarter estimate for Bunge by?12 to 93 cents per share, but cut its estimate for ADM by 4 cents at 62 cents.
Bunge projected its adjusted profit for 2026 at $7.50-$8.00 per share. ADM forecasted its earnings in 2026 at $3.60 to $4.25 per share.
Crushing SOY AT NEAR MAXIMUM CAPACITY
Agribusinesses have found oilseed processing to be a lucrative business after the soaring demand of biofuels made from plant oils such as soyoil sparked the biggest expansion in U.S. crushing ever seen in recent years. As crude oil prices continue to rise due to the global supply disruptions caused by the Iran War, elevated soyoil may support robust crush margins. The benefit to soy crushers, however, is limited, as the processing rate is already near maximum capacity. High construction costs are also discouraging expansion, with tariffs on steel and aluminum, and higher interest rates than a few year ago. Construction of a new?plant usually takes three to four years, from conception to completion.
According to sources in the processing industry, a new crushing plant will open this year and two existing plants will be expanded. (Reporting and editing by Emily Schmall, Paul Simao, and Karl Plume from Chicago)
(source: Reuters)
