Andersons (NASDAQ:ANDE) President and CEO William E. Krueger said the company remains confident in the durability of its ethanol business, citing strong plant operations, export demand, higher RIN values and ethanol’s price discount to gasoline.
In a question-and-answer session, Krueger said the company’s ethanol plants have benefited from years of maintenance capital and staffing investments, positioning them to run at full capacity or above. He described the current ethanol market as “demand driven,” pointing to record export years in 2024 and 2025 and saying 2026 is on pace for another record.
Krueger also said the finalization of the Renewable Volume Obligation, or RVO, has pushed RIN values higher, which he called “very positive.” He added that ethanol has been trading at a significant discount to gasoline for several years, with recent geopolitical developments only magnifying that spread for a short period.
Ethanol Margins and RVO Impact
Asked about second-quarter ethanol margins, Krueger said margins have been “good” but “not robust.” Using board crush as a reference point, he said the April-through-June strip was in approximately the top 60th percentile over time, despite some softening over the prior five to seven trading days.
Krueger defended the company’s decision to hedge a portion of first-quarter ethanol production, noting that in the first quarters of 2023, 2024 and 2025, the company averaged a zero board crush. When the company had the opportunity to hedge a percentage of production at double-digit levels, he said management viewed it as prudent risk management. He also reiterated that the company had no forward hedges beyond what it had put in place for the first quarter.
On the RVO, Krueger said higher requirements for biodiesel and renewable diesel should increase demand for D4 RINs, limiting their availability to cover D6 RIN values. That, he said, increases the value of blending ethanol for non-Tier 2 blenders and supports demand for higher ethanol blending.
He also highlighted the value of distillers corn oil, or DCO, as a low-carbon-intensity feedstock. “Every $0.10 that DCO goes up, it drops $14 million to the bottom line,” Krueger said.
Exports Remain a Key Ethanol Driver
Krueger said Canada remains the largest buyer of U.S. ethanol, importing roughly 800 million gallons of the 2.1 billion gallons exported last year. He said Canada continues to grow year-over-year demand for U.S. ethanol.
Europe and the United Kingdom are also important destinations, while Vietnam has announced expanded blend rates. Krueger said many countries with substantial gasoline consumption are raising ethanol blend rates, describing ethanol as “the cheapest oxygenate in the world.”
Asked about Brazil, Krueger said he does not expect the country to remain a consistent buyer of U.S. ethanol. Instead, he said Brazil typically buys during its sugarcane intercrop period, roughly from late January or February through the first half of March. He noted that Brazil has increased corn-based ethanol production and has moved aggressively on blend rates, currently at 30%, with discussion of a move to 32%.
Agribusiness Outlook and Farmer Selling
Krueger said the global agricultural supply-demand outlook varies by commodity. In wheat, he said the U.S. is expected to produce the smallest hard wheat crop since 1972, creating potential volatility in North America even though global wheat supply and demand are not especially tight.
On corn, Krueger said he does not see substantial tightening in 2026, though he sees a possible tightening scenario in 2027 in both the U.S. and global balance sheets. He said last year’s U.S. corn crop produced a record yield and the largest crop on record, yet carryout grew only modestly, partly because Brazil has been consuming more of its corn domestically through ethanol production and feeding.
Asked about potential China trade commitments, Krueger said a commitment by China to buy around 25 million metric tons of U.S. soybeans could materially tighten soybean carryout and benefit U.S. producers. He also said a lack of a tariff-rate quota for milo would specifically benefit The Andersons, and that renewed Chinese purchases of distillers dried grains, or DDGs, could affect soybean meal and ethanol market dynamics.
Regarding the financial health of U.S. farmers, Krueger said farm income is increasing year over year and that futures markets have rallied since crop insurance prices were set. He said The Andersons has the largest deferred book for forward sales since spring 2023 and the largest new-crop book companywide, though he noted the company is larger following its acquisition of Lansing.
Capital Projects and Growth Priorities
Krueger said The Andersons is nearing completion of its Houston export terminal project. The grain export capacity upgrade is expected to be completed in late May or early June, while soybean meal export capacity is expected to be completed around late September. He said the soybean meal export capability should be a strong addition as soybean crush capacity expands, particularly in the Western Corn Belt.
The company is also investing in food processing capabilities, including wheat cleaning at its Brantford, Ontario, facility, and is pursuing organic ethanol capacity additions where economics support them. Krueger said the company has announced 30 million gallons of added ethanol capacity in Indiana.
On mergers and acquisitions in ethanol, Krueger said the company does not know how 45Z has affected plant valuations because few plants have traded. He said The Andersons will remain disciplined and will not pay upfront for 45Z value without discounting it. He added that bid-ask spreads remain wide, particularly for plants with carbon sequestration potential.
Krueger said capital may be directed toward low-carbon-intensity feedstocks for bio-based diesel. The company has publicly targeted 2 billion pounds of feedstocks, and he said recent activity indicates the company is “well on our way,” with the target potentially achievable in 2027. He also said the company’s tank farm in Ulysses, Kansas, is online and ready to go.
Confidence in 2028 EPS Target
Krueger reiterated confidence in the company’s target of $7 in earnings per share exiting 2028. He said that when the target was discussed in December, The Andersons was coming off trailing 12-month EPS of $2.56. He said that figure moved to roughly $3.50 at the end of December and $4.23 at the end of the first quarter.
“We have confidence that without substantial reinvestment in M&A activity, that our path to $7 exiting 2028 is something we’re very confident in,” Krueger said.
About Andersons (NASDAQ:ANDE)
The Andersons, Inc operates as a diversified agriculture company offering a broad range of products and services to farmers, retailers and industrial customers. Through its Grain Group, the company purchases, stores, merchandises and transports corn, soybeans and other commodities, while its Renewables Group produces ethanol and distillers grains at multiple plants in the U.S. The Rail Group provides locomotive leasing, railcar repair and related maintenance services, and the Horticulture Group supplies turf, specialty and horticultural products to landscaping professionals and consumer lawn and garden retailers.
Founded in 1947 and headquartered in Maumee, Ohio, The Andersons has grown from a regional grain elevator operator into an integrated agribusiness platform.
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