Agribusiness · Ag Processing & Trading
Working Capital in Commodity Trading
Why ag merchants carry large inventories and receivables: ADM operating WC $7.89B, Bunge RMI $11.36B, and why adjusted leverage differs from net debt/EBITDA.
Selborne Research · Ag Processing & Trading coverage: 7 guides, 5 company profiles, a primer and Excel model
Educational analysis for professional use. This guide is not investment advice or a recommendation to buy or sell any security, and it is not personalised.
On this page
- Strong Earnings Can Arrive With Weak Cash Flow
- FY2025 Working Capital at Four Companies
- Bunge: RMI, Cash Flow and Two Leverage Ratios
- ADM: Operating Working Capital and Sold Receivables
- The Andersons: Smaller Scale, Ethanol Mix
- Ingredion: An Ingredients Maker Carries Far Less
- Modelling Working Capital in a Crusher
- Credit Measures to Read Beside Net Debt
Strong Earnings Can Arrive With Weak Cash Flow
A grain merchant can report strong EBIT while its cash goes into inventory. It owns the grain from the farm through elevators, crush plants and export terminals until the customer pays, so the pipeline sits on the balance sheet as inventories, receivables and prepayments to farmers. A valuation that leaves working capital out misses the cash a strong year absorbs as prices and volumes rise. Lenders already adjust for it; equity models should too.
FY2025 Working Capital at Four Companies
| Company | Measure | FY2025 |
|---|---|---|
| ADM | Operating working capital | $7,888M (9.8% of revenue) |
| ADM | Total inventories, of which carried at market value | $10.37B, of which $6.22B |
| ADM | Trade receivables (net) | $3.02B |
| Bunge | Total inventories / readily marketable inventories (RMI) | $13,198M / $11,361M (86% RMI) |
| Bunge | Trade receivables | $3,870M |
| The Andersons | Working capital | $690M |
| The Andersons | RMI / inventories | $1,001M / $1,365M (73% RMI) |
| Ingredion | Change in trade working capital in operating cash flow | $(75)M |
Readily marketable inventory is grain and oilseed stock that trades on exchanges and can be sold at a quoted price. Bunge holds the highest share among the listed companies, 86%. ADM does not use the label; its nearest line is the $6.22B of inventories carried at market value, mostly grain and oilseeds held for trading. The Andersons shows the same structure at smaller scale (73% RMI).
Bunge: RMI, Cash Flow and Two Leverage Ratios
Bunge’s segment EBIT was $2,329M in FY2025, yet operating cash flow fell to $844M from $1,900M, mainly because of working-capital changes, its earnings release says. Its leverage reads very differently on two definitions:
| Measure | Bunge FY2025 | How it is built |
|---|---|---|
| Debt less cash | $12,916M | Total debt $14,051M less cash $1,135M; Bunge’s own net debt, $12,055M, also deducts $861M of marketable securities |
| Debt less cash / EBITDA | 5.8× | $12,916M over EBITDA of $2,236M (group EBIT, after corporate costs, plus depreciation) |
| Adjusted leverage ratio | 1.9× | Bunge’s own measure, crediting most of its RMI against debt |
The 5.8× ratio treats every dollar of debt alike. Bunge’s 1.9× is adjusted net debt of $5,276M over adjusted EBITDA of $2,766M: the $12,916M less $861M of marketable securities (which gives Bunge’s own net debt of $12,055M), less a credit for 70% of RMI ($7,953M), plus $1,174M of receivables sold under its securitisation programme (a sale of receivables to raise cash early), which is how rating agencies treat those items. Both numbers are true on their own definitions.
Bunge publishes two returns for the same reason: ROIC of 6.9%, and adjusted ROIC (AROIC) of 8.1%, which takes RMI used in merchandising out of the capital and its funding cost out of the return. The ROIC vs adjusted ROIC guide reconciles them.
ADM: Operating Working Capital and Sold Receivables
ADM reports operating working capital of $7,888M as its own measure. Trade receivables were $3.02B net. ADM also raises up to $3.0B of funding against receivables it sells into securitisation programmes, and had used $2.1B at the end of FY2025. Those receivables leave the balance sheet, but ADM counts the programmes among its lines of credit, so read the $2.1B as funding, as Bunge does with its own.
Working capital is part of the capital a return is measured on. ADM’s FY2025 ROIC was 4.5% on its own definition, and 6.3% after adding back charges such as impairments and restructuring; unlike Bunge, ADM does not take inventory out of the capital. The valuation guide shows what taking near-cash inventory out of capital does to a merchant’s return.
The Andersons: Smaller Scale, Ethanol Mix
The Andersons’ working capital, current assets less current liabilities, fell to $690M from $1,119M in 2024, mostly because cash fell by $463M. The operating items still took $101M of cash in FY2025: operating cash flow was $177M against $278M before working-capital changes. RMI was 73% of inventories.
Ethanol can hide strain in the grain business. Renewables earned $203.1M of adjusted EBITDA (52.1% of the two segments) against $186.7M (47.9%) from Agribusiness, where the grain inventory sits. Corporate costs of $(52.5)M sit outside both, leaving group adjusted EBITDA of $337.3M.
Ingredion: An Ingredients Maker Carries Far Less
Ingredion, a starch and sweetener maker, trades no grain on this scale. Changes in trade working capital took $75M out of its FY2025 operating cash flow. Its inventory of $1,227M was about a tenth of Bunge’s $13,198M, and its receivables of $1,185M under a third of Bunge’s $3,870M. Net debt was $757M, 0.6× adjusted EBITDA.
Modelling Working Capital in a Crusher
The Excel model that comes with the primer holds its illustrative crusher’s operating working capital at 10% of revenue, close to ADM’s FY2025 9.8%. At mid-cycle the crusher’s revenue is about $18.9B (1,323M bushels at $14.30, the bean price plus the board crush), so working capital is about $1.9B, and it moves every year with volume and price. The crush margins guide builds that crusher at illustrative long-run prices.
When the crush and volumes rise, EBIT rises at once, but part of the gain goes into inventory and receivables before it reaches shareholders. A crush sensitivity alone misses that.
Credit Measures to Read Beside Net Debt
- Adjusted leverage, where the company publishes one.
- Operating working capital as a share of revenue.
- Operating cash flow before and after working capital.
- RMI as a share of inventories.
Plain net debt over EBITDA still matters for servicing debt, but on its own it makes a merchant look more stretched than its lenders judge it. Pair it with the segment map to see whether trading or crushing is building the inventory.
Ag Processing and Trading Sector Primer
A hypothetical merchant crusher and an ingredients processor valued year by year, with the crush recovering to a long-run level and ROIC set against the cost of capital.
- 15 sections, from how a merchant earns to a ten-year DCF and leverage net of readily marketable inventories
- 40 pages
- a merchant oilseed crusher and an ingredients processor, each on the same ten-year DCF
- 2 company engines
- listed merchants, processors and ingredients companies on filed FY2025 figures
- 5-company screen
The Excel model is the primer's through-cycle valuation live across 11 sheets: a merchant crusher tab, with the board crush reverting from its starting point to mid-cycle and working capital funded each year, and an ingredients tab, each running a ten-year free-cash-flow schedule; a valuation summary setting each DCF beside the through-cycle multiple, with the gap split into what the weak years cost and how much more the multiple pays than the cash flows support; cycle scenarios, a crush-margin and ROIC view, a leverage screen with and without readily marketable inventories and two live sensitivity grids. Change the crush, the throughput or the WACC and the value moves.
See what's in the Ag Processing and Trading Sector Primer →£25 PDF · £59 with the Excel model · £159 for all three Agribusiness industries
Frequently Asked Questions
- Why do commodity traders carry so much working capital?
- They own the grain and oilseeds between buying them from farmers and being paid by customers, so inventories, trade receivables and prepayments to farmers sit on the balance sheet. ADM's FY2025 operating working capital was $7,888M, 9.8% of $80,269M revenue. Bunge's inventories were $13,198M, of which $11,361M were readily marketable inventories (RMI).
- What is readily marketable inventory (RMI)?
- Grain and oilseed stock that trades on exchanges and can be sold at a quoted price, so lenders and rating agencies treat much of it as near-cash. Bunge's FY2025 RMI was $11,361M of $13,198M inventories (86%); The Andersons' was $1,001M of $1,365M (73%). A high RMI share lowers leverage on an adjusted measure such as Bunge's.
- Why does Bunge adjusted leverage differ from net debt/EBITDA?
- Debt less cash over EBITDA was 5.8× in FY2025 ($12,916M over EBITDA of $2,236M); Bunge's own net debt, $12,055M, also deducts marketable securities. Bunge's own adjusted leverage ratio was 1.9×, because it gives credit for most of the readily marketable inventory the debt funds, treating that stock as close to cash.
- How should a valuation handle a merchant's working capital?
- Put it in the cash flows. A merchant's working capital rises with volumes and prices, so an EBITDA multiple on its own misses the cash the business absorbs. The Selborne Excel model funds an illustrative crusher's working capital at 10% of revenue each year inside its ten-year DCF.
Read next
The ABCD Agricultural Traders
ADM, Bunge, Cargill and Louis Dreyfus as origination-and-processing merchants; private-peer scale, Bunge's post-Viterra four-segment map, and why no filing uses the ABCD label.
Valuing Ag Processors (EV/EBITDA, ROIC)
Normalising EBITDA on a long-run crush, ROIC against WACC, and filed FY2025 returns on capital at Ingredion, Bunge and ADM, each on its own definition.
Origination, Processing and Ingredients
The ag value chain from farm origination through crush and refining to specialty ingredients: ADM and Bunge segment maps, and why INGR, DAR and ANDE need different lenses.
ROIC vs Adjusted ROIC in Ag Processing
Why ADM, Bunge and Ingredion each file two returns on capital: which adjustment moves the earnings and which moves the capital, and why returns compare only on one definition.
See it applied
These company profiles apply the concepts from this guide to real public companies.