Archer Daniels Midland Company ADM has been struggling with various challenges for a while. A highly dynamic landscape, coupled with weak market conditions, tariffs and trade policy uncertainty, has been making things difficult for ADM. Sluggishness in its Ag Services and Oilseeds unit for quite some time now is another concern.

Consequently, shares of this renowned agricultural producer have lost 19% in the past year, underperforming the broader Consumer Staples sector’s and S&P 500 index’s increases of 5.9% and 10.7%, respectively. The stock has declined wider than its Agriculture - Operations industry’s 1.8% dip.

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What's not Working in Favor of ADM?

In the Ag Services and Oilseeds segment, the company has been grappling with numerous headwinds in the agriculture cycle, with a few market dislocations and increased cost inflation. The Crushing subsegment has been witnessing lower margins on elevated industry capacity, competitive meal exports from Argentina, elevated manufacturing costs and depressed vegetable oil demand owing to biofuel and trade policy uncertainty.

In Refined Products and Other, biofuel and trade policy uncertainty hurt biodiesel margins. Weak oil demand and higher crush capacity also adversely affected refining margins year over year. Soft demand from food customers in North America has also negatively affected refining margins. Such factors have been hurting the overall segment’s performance and, in turn, ADM’s results.

Several market and geopolitical challenges, with ongoing price weakness of main feed ration commodities, are acting as deterrents. Potential risks and uncertainties, including complying with the evolving regulations, obtaining the regulatory approvals and other operational challenges, are other deterrents. In addition, the company faces stiff competition concerning raw materials, transportation services, other materials and supplies. 

Management remains cautious about the second-half outlook for crush margin improvement as present domestic crush replacement margins are trending below the company’s outlook. ADM has seen a few signs of weakening customer demand, mainly in carb solutions, and has cut its volume expectations for certain markets and products. 

With the uncertainty associated with tariff policy and macroeconomic conditions, management has not issued a segment operating profit outlook for future quarters. For 2025, management envisions adjusted earnings per share to be in the band of $4-$4.75. However, the metric is currently expected to come at the lower end. ADM posted adjusted earnings of $4.74 a share in 2024.