Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the interplay between U.S. and South America crops and timing and farmer selling in terms of the implications for crush margins?
A: Juan Ricardo Luciano, Chairman, CEO & President of ADM, explained that Brazil has seen better farmer selling due to the harvest and currency devaluation, improving Q2 crush margins. Argentina presents more uncertainty due to economic instability and strikes. He outlined a seasonal pattern where margins dip in Q2 and Q3 with South American crops, then recover in Q4 with the U.S. crop. He also noted strong meal demand and new renewable diesel plants in the U.S., which should support higher crush margins later in the year.
Q: What dynamics are driving the recovery in volume in the Carbohydrate Solutions segment?
A: Juan Ricardo Luciano noted strong demand across all segments, with reduced costs for chemicals and energy improving margins. He highlighted strong exports to Mexico and other countries, expressing confidence in a robust Q2 performance. He also mentioned the potential for improved ethanol margins during the maintenance season.
Q: Can you clarify the different impacts on ethanol margins noted between Starches and Sweeteners and VCP?
A: Juan Ricardo Luciano clarified that VCP results benefited from strong export demand for sustainably certified ethanol, which commands a premium. He noted that ethanol is a cost-effective oxygenate with strong global demand, expecting healthy exports and domestic blending demand to balance out industry inventories.
Q: What is the path to the full restart of the Decatur East plant?
A: Juan Ricardo Luciano indicated significant ongoing activity at the Decatur East plant, expecting it to be operational in Q4. He mentioned that the Nutrition segment would face headwinds throughout the year due to issues at this plant, promising more details as they become available.
Q: Could you discuss the outlook for crush margins, particularly for soy, and the assumptions about regional performance and soybean oil demand?
A: Juan Ricardo Luciano discussed expectations for North American crush margins to be lower in Q2 and Q3, then improve in Q4 with increased soybean availability and renewable diesel capacity. He noted better crush margins in Brazil and stable margins in Europe, with a general expectation for a soft middle of the year followed by a stronger end.
Q: How are you addressing the transition from a blenders tax credit to a producers tax credit in the U.S., and what are the implications for soy oil demand?
A: Juan Ricardo Luciano explained the transition to a production tax credit in 2025, emphasizing the need for regulatory clarity to ensure smooth price discovery and investment certainty. He highlighted ongoing advocacy efforts to include grid carbon intensity modeling in the calculations, which would benefit the industry.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
