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ADM 2025 Outlook clouded by biofuel policies and trade tensions
Global grains trader Archer-Daniels-Midland is slashing costs and cutting staff to weather a commodity downturn made more challenging by uncertainty about U.S. biofuels policies and a brewing trade war, the company said on Tuesday. ADM's problems follow a scandal in accounting that occurred last year, which forced the company twice to revise its financial statements. A federal investigation was also launched. ADM posted its lowest fourth-quarter profit for six years on Tuesday and predicted that 2025 could see a third consecutive year of earnings decline. ADM announced that it will eliminate up to 700 positions and cut costs by up to $750,000,000 in the next 3 to 5 years. It is joining rival agribusiness Cargill to tighten its belt. CEO Juan Luciano stated that it was hard to predict the outcome of ADM's international trading business if President Donald Trump’s orders to increase tariffs on Canada and Mexico, or China, spark widespread retaliation by the top three purchasers of U.S. agricultural goods. China retaliated with limited tariffs against the new U.S. duties on Chinese products on Tuesday. Beijing's tariffs excluded crops. Trump has suspended tariffs on Canadian goods and Mexican products for a month. Luciano added that "the issue" is the retaliatory actions. He said that ADM was on a list of grain trading companies who could benefit from the current trade turmoil. ADM can still provide crops from Brazil to a market that has halted its imports of U.S. agricultural products. However, such interruptions may reduce the trading margins. ADM expanded its global grain distribution and origination footprint in 2018, when China cut its U.S. soya bean purchases. This prompted the company to tap into its Brazilian supply chain for that country. Luciano stated that ADM, along with other crop processors, were waiting for policy guidance on the size and scope tax credits available to U.S. producers of biofuels. These tax credits could boost oilseed crushing margins and biodiesel production. ADM, a pioneer in ethanol production and for many years the leading producer of ethanol in the United States, supplies biofuels to Marathon and other companies through its massive processing facilities.
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Arabica coffee nears $4 per lb, a new record.
The rally in Arabica coffee continued into Tuesday. It set a new record for the ninth consecutive session, as roasters rushed to secure supplies while farmers refused to sell. Recent gains in arabica futures on ICE have been attributed to an expected production slump in Brazil, the top coffee producer. This follows a 70% increase in arabica futures last year. During the ICE trading session on Tuesday, Arabica futures, used as a benchmark for global prices, reached a record price of $3.8990 a lb. The price of the lb rose 0.6% to $3.8335, which brings their gains this year up to about 20%. Dealers reported that speculative buyers are dumping coffee in large quantities, which has caused panic buying by farmers and roasters to hold back sales, hoping for higher prices. One dealer stated that the natural target this week would be to test the $4/lb level. The Brazilian drought last year has contributed to the expected decline in Arabica production. However, some experts believe that the current harvest may not be as bad compared to a year ago, due to recent rains. Brazil produces almost half of the arabica in the world. Brazilian exporter Comexim predicted a slightly lower crop in 2025 than the previous season at 63.2 millions bags. The price of Robusta, a cheaper variety that is used mainly to make instant coffees, increased by 0.5%, to $5,548 per metric ton. It peaked last week at $5840, which was the highest since the contract began trading in 2008. When coffee prices reach this level, the fundamentals become less important. Speculators are going to speculate. After the cocoa rally and what happened with cocoa, many would be interested in coffee," Rabobank wrote in a note. Rabobank also added that the market is concerned about U.S. President Donald Trump imposing trade tariffs against South American countries which are major coffee producers. Other soft commodities saw New York cocoa futures fall 0.4% to $10.865 per ton after losing 5% the previous week. London cocoa fell 0.7% to 8.694 pounds a ton. White sugar increased 2.5%, to $526.80 per ton, while raw sugar was up only 0.4 cents, or 2.1%. (Reporting and editing by Maytaal Teixeira and Marcelo Angel; Alan Barona, Alexander Smith, and Paul Simao)
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Overview of Iran's Energy Industry and Infrastructure
A U.S. official has said that U.S. president Donald Trump will again reimpose the "maximum" pressure on Iran, and reduce its oil exports to zero. Iran is the third-largest producer of oil in the Organization of Petroleum Exporting Countries. It extracts around 3.3 million barrels of crude oil per day, or about 3% of the global output. Here are some interesting facts about the energy industry of the country, its exports, and the impact that previous Western sanctions had on it. OPEC AND SANCTIONS According to OPEC, Iran's oil output peaked in the 1970s. In 1974 it reached a record 6 million barrels per day. This was over 10% of the world's output. The United States first imposed sanctions against Tehran in 1979. Since then, several waves of U.S. sanctions and European Union sanctions have been aimed at the country. In 2018, the United States tightened its sanctions after Trump pulled out of a nuclear agreement during his first term as president. Iran's oil sales fell to near zero in some months. Analysts say sanctions were not enforced as strictly under the administration of Trump's successor, President Joe Biden. Iran was able to evade them. Iran is exempted from OPEC production restrictions. Who is the main buyer of Iranian oil? Iran's crude oil exports reached a record high of 1.7m bpd, the highest level since 2018. This was largely due to strong Chinese demand. China claims it does not recognize sanctions against its trading partners. China's private refiners are the main buyers of Iranian crude oil, and they have very little financial exposure to the United States. Iran has been evading sanctions for years by hiding satellite positions and transferring ships from one vessel to another. PRODUCTION and INFRASTRUCTURE FGE consultancy estimates that Iran refines around 2.6 millions bpd crude and condensate, and exports about 2.6million bpd crude oil, refined products and condensate. According to FGE the country produces 34 billion cubic foot of gas every day. This is 7% of world production. The gas is used exclusively in the domestic market. Iran's hydrocarbon facilities are concentrated primarily in the southwest. For oil, they are located in Khuzestan Province and for gas and condensate produced from South Pars Field in Bushehr Province. Kharg Island is the main port of export for 90% of its crude oil. Analysts believe Saudi Arabia and the other OPEC countries could compensate for a drop in Iranian production by pumping more. However, the normalisation of relations between Riyadh and Tehran suggests that the kingdom might be less willing to do this.
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Donald Trump Jr. accused illegal duck hunting in Venice
According to two Italian Green Party lawmakers, Donald Trump Jr. broke Italian and European Union laws on environmental protection when he hunted a duck near Venice in December. Andrea Zanoni is a member of Veneto's regional assembly. Luana Zanella is a national parlamentar. They have filed separate questions in the parliament urging the regional and national authorities take action. Zanoni, in a post on Facebook, said that he saw footage of Trump Jr. standing next to a dead ruddy shaddy, a protected animal, in an EU conservation zone "Natura 2000", in the lagoon at Venice. The video shows Trump Jr. holding a ruddy shaduck (Tadorna ferrruginea), a duck which is extremely rare in Europe and protected under the EU Birds Directive as well as the Italian law protecting wild fauna. Zanoni stated that the law punishes anyone who kills or holds this animal. Hunting is allowed in Italy, but it's strictly regulated. In the video Zanoni mentioned, Trump Jr. is seen on a duck-hunting trip in marshlands around Venice, promoted by Field Ethos. This outdoor activities brand that he founded. In the video, he describes his hunting bounty as "lots of teal, wigeon (ducks)." The video shows him catching "a duck that is not common in the area and I am not sure what its name is" before concluding "incredible shot". Andy Surabian is a spokesperson for Trump Jr. He said that the hunting party had all the proper permits and were hunting in an area where they were allowed to do so. It was not clear how the duck was killed. Surabian stated in a press release that "Don takes all rules, regulations, and conservation very seriously on his hunts and intends to fully cooperate with any investigation." The Field Ethos video has a voiceover that says that the expedition was on private land. Hunting is only done once a week, and precautions are being taken to protect the local environment. The video is not dated. However, a shorter version of the video was uploaded to YouTube on December 31, 2024 by Field Ethos. Italian media reported that Trump Jr. visited Venice with his girlfriend in December. ANSA reported that Environment Minister Gilberto Pichetto Fratin said he was awaiting a report on the alleged incident, after he learned about it through press reports. (Reporting and editing by Alison Williams, David Gregorio and Alison Williams; Additional reporting by Angelo Amante & Giulia Segrit.
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The President of Lebanon says that he hopes TotalEnergies resumes oil and gas exploration as soon as possible
According to a press release from the president's offices, Lebanon President Joseph Aoun told Qatari Premier Sheikh Mohammed Bin Abdulrahman Al Thani on Tuesday that he hoped TotalEnergies would soon resume oil exploration off the coasts of Lebanon. In 2023, the state-owned QatarEnergy will join France's TotalEnergies (ENI.MI), and Italy's Eni in a consortium of three to search for oil and natural gas in two marine blocks off Lebanon's coast. Two sources who were directly involved in the matter said that no hydrocarbons had been found after the exploratory drilling offshore in 2023. TotalEnergies didn't respond to a comment request immediately. The plans to drill in Lebanon were halted until the ceasefire agreement between Israel and Hezbollah militant group was signed towards the end last year. After the two-year presidential vacuum was ended by the January election of Western-backed President Aoun, reconstruction plans including oil and gas exploration await formation of a Lebanese new government. Reporting by Menna A. Alaa El Dn and Nayera Abdallah, Editing by David Goodman
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Trump to reimpose maximum pressure on Iran and drive oil exports down to zero
A U.S. official revealed that Donald Trump plans to resume his "maximum-pressure" campaign against Iran on Tuesday in order to prevent Tehran from obtaining nuclear weapons and to drive its oil exports to zero. This move returns the U.S. to its tough policy towards Iran, which Trump, as a Republican Republican, had practiced during his first term. Trump accused his Democratic predecessor Joe Biden of reducing the U.S.'s resolve towards Iran. Trump said in his campaign that Biden’s policy of not strictly enforcing sanctions on oil exports had weakened Washington, and emboldened Tehran. This allowed Tehran to sell oil, collect cash, and expand its nuclear ambitions and influence via armed militias. In 2024, Iranian crude oil exports reached their highest level since the early 1990s as the country discovered ways to avoid punitive sanctions that targeted its revenue. Trump's return to a tougher approach coincided with his preparations to meet later Tuesday with Israeli Prime Minister Benjamin Netanyahu. The official confirmed that Trump would sign a presidential memo ordering the U.S. Treasury Secretary to exert "maximum pressure" against Iran. This includes sanctions and enforcement mechanisms for those who violate existing sanctions. The official stated that as part of its maximum pressure campaign, the Trump administration would implement a "campaign aimed at driving Iran’s oil exports down to zero". According to estimates by the U.S. Energy Information Administration, Tehran's oil exported brought in $53 Billion in 2023, and $54 Billion a year before, and production in 2024 reached its highest level since 2018. The Iranian mission at the United Nations, New York, did not respond immediately to a comment request. On Tuesday, oil prices fluctuated on the news of Trump's plans. Officials said that the U.S. Ambassador to the United Nations would work with key allies "to complete the snap-back" of international sanctions and other restrictions against Iran. Trump's maximum pressure campaign during his first term aimed to use harsh sanctions to choke Iran's economy, forcing the country to negotiate an agreement that would cripple its nuclear and missile weapons programs. Biden's administration did not loosen sanctions that Trump had put in place. However, there are disagreements about the degree to which the sanctions were enforced. In December, Britain, France and Germany informed the United Nations Security Council that they were prepared to snap back all international sanctions against Iran if needed to stop the country acquiring nuclear weapons. On Oct. 18, 2018, a U.N. Resolution from 2015 will expire. The resolution is a reaffirmation of the Iran deal that was reached with Britain, Germany France, United States, Russia, and China in which sanctions were lifted against Tehran in exchange for restrictions to its nuclear program. Amir Saeid Iravani has stated that reversing sanctions against Tehran by a "snap back" would be "illegal and counterproductive". In November and January, European and Iranian diplomats discussed whether they could defuse regional tensions and Tehran's nuclear programme before Trump returned to office. Rafael Grossi, the U.N.'s nuclear watchdog chief, said that Iran was "pushing the gas pedal" in its enrichment to weapons-grade uranium at the World Economic Forum last month. Iran has denied that it wants to develop nuclear weapons.
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Africa Energy Bank to launch in mid-year with South Africa showing interest
An Afreximbank representative said that the proposed Africa Energy Bank will begin operations in mid-year of this year. South Africa has also expressed interest in joining. The bank is a partnership between Afreximbank (Afreximbank) and the African Petroleum Producers Organization(APPO). It was created to fill a funding hole in Africa, amid increasing pressure from environmental groups on major banks to divert investment dollars from climate-warming gas and oil projects. "We are currently in the capital raising stage. A number of nations have already invested the money. "We are talking to a variety of countries in order to bring the capital in so that we can begin trading," Afreximbank Executive Vice President Denys Denya stated. We will definitely start trading in this year. "We're hoping to start trading before half-year," he said on Monday at Africa's annual Mining Indaba, in Cape Town. Afreximbank has not disclosed the funding commitments of the new countries. The bank, with a capitalization up to $5 billion initially, will offer tailored financing solutions for Africa's energy requirements. Denya stated that South Africa, Egypt, Nigeria, and Angola were all countries that have expressed interest in joining the bank. Jacob Mbele, Director General of the Department of Mineral Resources confirmed that South Africa is interested. He had requested the bank's prospectus prior to committing a funding amount. (Reporting and editing by Emelia Sithole Matarise; Nqobile Mbele)
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Sources say that a drone strike in Russia has halted the fuel production of Astrakhan's gas plant for several months.
Three industry sources told Reuters on Tuesday that the Astrakhan Gas Processing Plant in Russia will likely suspend its motor fuel production for a few months following drone attacks earlier this week. The complex is one of the largest in the world. Ukraine launched drones on Monday to strike energy facilities in southern Russia. The drones caused fires at an oil refinery, and a gas processing plant. Sources said that a unit for processing condensate was set ablaze during the attack. The unit's annual capacity was 3 million metric tonnes of condensate. Gazprom, the energy giant that controls the plant, has not responded to requests for comments. The unit is in a bad state. "The shutdown is expected to last three months," a source said. A second source stated that the unit could resume operations as early as July based on a preliminary evaluation. Traders said that the St. Petersburg International Mercantile Exchange had suspended sales of gasoline and diesel from this plant. In a video posted on Monday by the local governor Igor Babushkin, an employee told him that there was a problem with a unit of condensate treatment at the plant. According to industry sources, Astrakhan's plant produced 1.8 million tonnes of stable gas condensate and 800,000 tonnes of gasoline. It also produced 600,000 metric tons of diesel, as well as 300,000 metric tons of fuel oil. David Goodman is responsible for editing and reporting.
Third Point's Loeb anticipates favorable stock investing environment, says letter
Billionaire Daniel Loeb believes that 2025 will be a better year for stock investments despite Trump's unconventional approach to announcing new policies and implementing them.
Loeb told clients that his hedge fund Third Point was already reaping benefits in a letter sent to them on Tuesday. The firm's flagship TP Offshore Fund had risen 3.3% in the first month of the year after finishing the previous year with a 24.2% gain.
Third Point employs a wide range of strategies, from stock selection to activist campaigns and investments in credit. It is one of Wall Street's top hedge funds.
Loeb, for instance, said that the firm had rotated its investments into consumer discretionary companies, financial institutions, and industrial firms, which helped to fuel returns in a rally following an election.
Loeb stated that emotions must be removed from the equation when making investments. The Trump administration has imposed tariffs against Canada, Mexico, and China in its first two weeks of office. They have also called for the creation of a Wealth Fund, and issued dozens executive orders.
The new policies will have a positive impact on certain sectors. He expects an increase in corporate activity, such as M&As and other corporate transactions that feed our event-driven framework.
Third Point, a leading investment firm, made a major new investment, in Siemens Energy stocks. Siemens Energy is primarily a manufacturer of wind turbines and electrical grid equipment. The demand for gas turbines, grid equipment, and data center power will help to fuel the core business of Siemens Energy.
Loeb, who is a partner at Third Point, has also highlighted liability management exercises (LMEs), which are a strategy that companies use to restructure their debts and avoid bankruptcy as "the most engaging distressed credit opportunities."
He stated that LMEs represented half of the current corporate credit portfolio or $700 million. He said that he expects this area to become an important source for alpha over the next few months.
Loeb predicted that banks would sell more mortgage and consumer portfolios this year, as M&A will pick up due to fewer regulations. Third Point is an opportunistic purchaser, looking to get unlevered yields of the high single-digits.
Loeb added that Third Point would be an opportunistic purchaser, hoping to receive unlevered yields of high single-digits.
Loeb stated that banks will likely sell their consumer and mortgage portfolios this year as Washington is expected to be a friendly M&A environment. Third Point, he said, will be an opportunistic purchaser looking for yields of unlevered securities in the high single-digits. (Reporting and editing by Chris Reese, Cynthia Osterman, and Svea Herbst Bayliss)
(source: Reuters)