Trade War Dents ADM’s Grain Trading Profits

The Trump administration's trade battles are slowing shipments of crops, vegetable oils and other farm products while eroding profits for commodity trading and processing companies, ADM executives said.

Lower export volumes have created a glut of crops and pressured prices for products like soybean meal and seed oils. ADM Chief Financial Officer Monish Patolawala said the combination has pulled down profit margins "across our businesses."

Chicago-based ADM, one of the world’s largest grain shippers, said its commodity trading business profit fell 31% to $159 million in the quarter ended March 31. Operating profit from ADM’s grain and crop processing business, which turns soybeans into meal, cooking oils and biofuels, declined 52% to $412 million.

ADM’s $20 billion in revenue for the quarter came in below what Wall Street analysts anticipated. The company reaffirmed its adjusted earnings outlook, and shares gained 2.8% in midday trading.

China, one of the top destinations for American-grown soybeans, tends to rely on imports from South America during the summer months. The U.S. farm sector will suffer if the Trump administration’s trade war persists into October during the U.S. harvest, ADM executives said.