Will ADM's crushing subsegment operating profit exceed $500M in H2 2026?

The $500M H2 threshold implies roughly $250M per quarter, compared to a full-year FY2025 crushing OP of ~$330M (roughly $82.5M per quarter average). So the threshold requires about a 3x increase in quarterly crushing OP from the FY2025 run rate. While board crush margins have improved $40-50 for December 2026, cash margins have NOT followed. The gap between board and cash margins is the critical signal — it suggests physical market conditions haven't improved even if futures indicate potential. Q1 2026 is largely sold at weak levels, meaning H1 recovery is unlikely, making the H2 threshold even more demanding.

The threshold is $500M in H2, which would represent approximately 60% of FY2024's peak full-year crushing OP ($1.7B) in just two quarters. This level of recovery would require near-peak margins in a period where the fundamental drivers (RVO clarity, soybean oil demand for renewable diesel) are uncertain. The EPA RVO final rule probability is only ~18% by Q3 2026, meaning the primary catalyst for crush margin recovery is unlikely to arrive in time. Without RVO clarity, the renewable diesel industry expansion that would drive soybean oil demand and crush margins remains stalled.

There is a scenario where global soybean supply tightness (South American weather issues) or unexpected demand acceleration (biofuel mandates in other countries, renewable diesel capacity coming online) could drive crush margins higher independent of US RVO policy. ADM increased crush volumes 7% sequentially in Q4 2025, demonstrating operational capacity. The structural cost savings program may also improve crushing margins at the operational level. But the magnitude required ($500M H2 from ~$330M full-year FY2025) makes this a stretch even with favorable supply-demand dynamics.

The $500M threshold is demanding. FY2025 full-year crushing OP was ~$330M. Achieving $500M in just H2 2026 would require margins at approximately 75% of FY2024 peak levels. The Stress Scanner converged on LAGGING operational execution, and the crush margin collapse was driven by structural factors (weak biofuel demand, industry overcapacity in renewable diesel) not just cyclical dynamics. Board margins improving without cash margins following is a bearish signal — it suggests futures market optimism is not being confirmed by physical trade.

The most important observation from the analysis is that cash margins have NOT followed board margins higher. This is the clearest signal that the physical crush market hasn't recovered. ADM's own guidance assumes flat Q1 crush margins vs Q4 2025, confirming near-term weakness. For H2 2026 to produce $500M, conditions need to change materially by mid-year. The probability of RVO clarity by Q3 is low (~18%), which removes the primary catalyst. Without a policy catalyst, margin recovery depends on global supply-demand rebalancing, which is inherently uncertain and slow.

Commodity cycles can turn faster than expected. If South American crush season underperforms (weather, trade disruptions), North American crushers including ADM could benefit from demand displacement. The $40-50 improvement in board margins for December 2026 suggests the market does expect some recovery. If cash margins eventually follow board margins with a 3-6 month lag, H2 2026 could see meaningful improvement. But $500M remains a high bar — probably requires both policy clarity and favorable supply dynamics simultaneously.

The $500M threshold is very demanding compared to the FY2025 full-year run rate. Cash margins not following board margins is the key bearish signal. Low probability without a major policy or supply catalyst.

FY2025 full-year crushing OP of $330M makes $500M in H2 alone extremely aggressive. Even with board margin improvement, cash margin confirmation is missing. 20% reflects the tail scenario of rapid commodity cycle turn.

The threshold is approximately 3x the FY2025 quarterly rate. While commodity cycles can recover, this magnitude of recovery in H2 alone requires multiple favorable factors converging. Around 20-25% probability.