By Evie Liu

Stocks in Archer Daniels Midland and Bunge Global, two of the world's largest agricultural commodity trading firms, plunged on Friday. Falling soybean prices -- partially due to President Donald Trump's trade war with China -- could hurt their already weak earnings.

AMD shares fell 8.9% in Friday's trading, reaching its lowest level since August 2020. Bunge stock tumbled 6.7%, hitting its low since February 2021.

The movements come as prices for soybean's front-month futures contracts plunged 3.7% on Friday following China's announcement that it would impose an additional 34% tariff on all American goods, starting from April 10.

China has already imposed 10% to 15% on roughly $21 billion worth of agricultural imports, including soybeans, from the U.S., effective since March 10. Beijing also suspended import qualifications for three U.S. entities, effectively halting their soybean shipments to China.

All this could lead to less demand for American soybeans and push prices lower. Beijing has already been shifting its soybean purchases to alternative suppliers like Brazil since the 2018 trade war with the U.S.

Both AMD and Bunge are heavily involved in the soybean processing and trading business, and their revenue and profit are directly impacted by prices and trading volume of the commodity.

Revenue drops if soybean prices fall and volumes stagnate due to export restrictions or tariffs. Since the costs of crushing and processing remain the same, if not higher due to inflation, cheaper soybean prices also means thinner margins.

Some of the impact could be offset if the companies take advantage of the price volatility and make money through arbitrage, hedging, or other speculative opportunities.

AMD and Bunge stocks have already seen notable declines since 2022 thanks to their weak financial performance. This was partially caused by declining soybean prices as favorable weather in major producing countries has led to increased supplies.

Soybean prices on the Chicago Board of Trade have fallen from around $15 per bushel two years ago to below $10 as of this week.

ADM's 2024 revenue declined 9% from a year ago, following a 7.5% drop in 2023. Net income shrank by more than half from 2022 to 2024. Likewise, Bunge's annual revenue fell by over 10% for two years in a row, while net income in 2024 dropped nearly 50% from the previous year.

Both companies have projected 2025 adjusted earnings to be even lower than last year. ADM shares have tumbled 54% in the past three years, and Bunge stock has lost 38%.

ADM has announced plans to cut approximately 700 jobs globally, aiming to save between $500 million and $750 million over the next three to five years.

Still, the long term driver for soybean prices will always be supply and demand, and prices will find a new balance if the tariffs stay, says Morningstar strategist Seth Goldstein.

"If we're looking at the very near term, something like tariffs can have an impact," he told Barron's. "But longer term, if China sticks with the U.S. soybean tariff, we'd likely see American soybeans go to other destinations."

"Big firms like ADM and Bunge are buying and selling crops from all over the world to all over the world. I think it would be easier for them to forge new trade paths," he adds.

Write to Evie Liu at evie.liu@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 04, 2025 15:47 ET (19:47 GMT)

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