Detailed narrative
RVO clarity ignites the biofuels chain
The EPA's March 27 publication of 2026 and 2027 renewable volume obligations was the quarter's defining event. Management had previewed the sequence: RINs rise first (they moved up ~$1), creating margin for biodiesel and renewable diesel plants to come on stream, which pulls soybean oil demand and lifts crush margins and rates.
North American crush rates jumped 6% in March and ran roughly 10% above the prior year. Juan noted the response came 'with more violence than we expected,' likely from pent-up demand after a multi-year wait and perceived diesel tightness tied to the Strait of Hormuz.
Management commended the administration for a policy that supports American farmers and domestic energy security.
AS&O masked by mark-to-market and timing losses
Ag Services & Oilseeds operating profit fell 34% YoY to $273M, but the headline was distorted by ~$275M of net negative mark-to-market and timing impact📎s — roughly 70% in crushing, the balance split two-thirds refined products and other, one-third Ag Services (vs. ~$22M mainly in Ag Services a year ago).
Management frames these non-cash losses as a signal of improving underlying conditions from rising commodity prices, with the majority expected to reverse in Q2. Beneath the noise, Ag Services profit rose 26% to $200M on higher North American exports and China trade, crushing posted a $79M loss (a $126M YoY swing), refined products fell 36% to $86M, and Wilmar equity earnings were $66M, down 8%.
Carbohydrate Solutions carried by ethanol
Carb Solutions profit rose 48% YoY to $356M. Starches and sweeteners profit grew 11% to $229M as stronger corn wet-milling ethanol more than offset lower liquid sweeteners and starches volumes (down 3%) and margins. Vantage corn processors profit surged $94M to $127M on strengthening dry-mill ethanol margins, effective risk management and policy incentives.
Base ethanol EBITDA margins were higher both sequentially and YoY, up roughly $0.18/gal versus the year-ago quarter. Ethanol near $2/gal is highly competitive globally against product north of $3.50, supporting domestic blending (~14.5B gallons) and exports (~2.4–2.5B gallons).
Nutrition recovery led by flavors and Decatur East
Nutrition revenue was $1.8B, down 1% YoY, but operating profit rose 42% to $135M. Human nutrition revenue grew 3% while profit jumped 39% to $104M on higher flavor sales, favorable FX, and the continued recovery of the Decatur East plant, whose product is regarded as the industry's best quality and whose full volume is now being offered.
Animal nutrition revenue fell 5% (portfolio exits and the Alltech JV) but profit rose 55% to $31M on portfolio/cost optimization, FX, and a shift to higher-margin lines. Management is still recovering customer positions lost during the more-than-year-long Decatur East outage.
Guidance raise, cadence and second-half caution
ADM raised FY26 adjusted EPS guidance to $4.15–$4.70 from $3.60–$4.25, on continued execution and a sustained constructive crush/ethanol environment. Management guides to a roughly 49/51 first-half/second-half split, with Q2 stronger than Q1 on the mark-to-market reversal, seasonally higher Nutrition/flavors, and ethanol strength.
The second half carries an inverted forward crush curve, a higher tax rate (Q1 was low), and planned R&D/digitization reinvestment. Key watch items: China's soybean buying normalization (assumed for Q4), energy costs, FX, tariffs and trade policy. The 45Z benefit was raised to ~$150M for 2026 from ~$100M.
Growth platforms and disciplined capital allocation
ADM detailed five growth pathways — advanced nutrition (natural colors/flavors, functional health), biosolutions (valorization, e.g. a starch-based fabric-softener component that won Henkel's best innovation contributor award), precision fermentation (animal-free pet-food protein trial completed; a novel food enzyme in development), and decarbonization (high-purity CO2, renewable natural gas, ethanol-to-SAF; ~300,000 metric tonnes of CO2 sequestered in Q1).
A new senior innovation and growth leadership role was created and a capability center established in India. Capital allocation stays balanced: capex held at $1.3–$1.5B, the 377th consecutive dividend paid ($254M), prudent bolt-on M&A, and possible future buybacks as cash flows improve.
Soybean crush and meal demand dynamics
Soybean meal demand remained strong, supported by a soybean-meal-to-corn ratio near or below 2 (more acute in China where corn is dearer), healthy livestock profitability, and expanding dairy output. U.S. meal exports were aided by Argentina, where old-crop cushioning is gone and crush is now harvest-limited after flood-delayed harvest.
Soybean oil is running ~52–52.5% of the crush, tightening the meal balance given robust meal demand. The forward soy crush curve is inverted, reflecting very strong immediate demand for oil and meal against flat nearby soybean pricing and second-half uncertainty around a potential China trade deal, conflict resolution, crops, weather and energy prices.