Executive Summary / Key Takeaways

• The Viterra merger transforms Bunge from a regional agribusiness into a globally balanced value chain orchestrator, creating durable competitive advantages through enhanced origination capabilities and processing scale that extend far beyond announced cost synergies.

• Biofuel policy uncertainty has compressed margins into a cyclical trough, but Bunge's expanded footprint and operational leverage position it for outsized gains as U.S. RVO proposals, SRE reallocation, and 45Z policy clarity emerge in early 2026.

• Argentina's economic stabilization and Bunge's position as the largest, lowest-cost crusher in the country creates a strategic profit engine that directly benefits from export tax reductions and improved farmer selling behavior.

• Grain merchandising volatility masks underlying value creation: the combined company's expanded storage, handling, and blending capabilities will generate more stable, fee-based earnings through the agricultural cycle, reducing historical earnings volatility.

• Critical execution risks include Viterra integration complexity, continued policy uncertainty pressing spot markets, and elevated debt levels from the transaction, but the risk/reward skews positively at current valuations given the company's enhanced strategic position.

Setting the Scene: Two Centuries of Evolution Meet a Transformative Merger

Bunge Global SA, founded in 1818, has spent two centuries building one of the world's most extensive agricultural supply chains. What began as a trading house has evolved into a vertically integrated agribusiness solutions company that touches every link from farm gate to consumer plate. This evolution matters because it explains how Bunge developed the operational expertise and asset footprint necessary to execute the most significant transformation in its modern history: the July 2025 merger with Viterra.

The agribusiness industry operates as an oligopoly, with the "ABCD" quartet—ADM , Bunge, Cargill, and Louis Dreyfus—controlling 50-60% of global grain and oilseed trade. This structure creates natural barriers to entry requiring billions in infrastructure investment and deep farmer relationships. Bunge's position within this elite group has historically been strong but regionally concentrated. The Viterra acquisition fundamentally alters this positioning, creating a company with enhanced diversification across crops, geographies, and end markets that can compete more effectively with ADM's scale while maintaining superior operational agility.

The company's business model generates value through three core activities: origination (purchasing and storing crops from farmers), processing (crushing oilseeds into meal and oil), and merchandising (trading and distributing commodities globally). Each activity carries distinct margin profiles and cyclical dynamics. Origination profits from basis appreciation and storage income. Processing captures crush margins between input costs and output prices. Merchandising profits from volatility and logistical arbitrage . The Viterra merger enhances Bunge's capabilities across all three, but more importantly, it enables integrated value chain optimization that was previously impossible.

Industry drivers are converging to create both challenge and opportunity. Global grain stocks-to-use ratios remain elevated, dampening price volatility and pressing merchandising margins. Simultaneously, biofuel policy uncertainty—particularly around U.S. Renewable Volume Obligations (RVO) , Small Refinery Exemptions (SRE) , and the 45Z policy tax credit—has created a spot market environment where customers refuse to forward contract. This compression of margins reduces visibility. However, it also creates asymmetric upside: the biofuel industry has substantial underutilized capacity, and any policy clarity will unleash pent-up demand for vegetable oils, particularly soybean and canola oil where Bunge is now the global leader.

Strategic Differentiation: The Value Chain as a Moat

Bunge's competitive advantage has never been about owning the most assets, but about integrating them into an orchestrated global network. The Viterra merger accelerates this strategy by connecting more local and regional origination networks into Bunge's global platform, providing insights and optionality that competitors cannot replicate. This transformation positions the company as a single, agile organism that can respond faster to market signals and execute more efficiently across the value chain.

The new segment structure—Soybean Processing and Refining, Softseed Processing and Refining, Other Oilseeds Processing and Refining, and Grain Merchandising and Refining—reflects this integrated operating model.

Unlike the old geographic silos, this structure enables global optimization of product flows, processing capacity, and risk management. Management emphasizes they are "running a global soy crush business" rather than thinking about Viterra versus Bunge. This organizational shift is critical, unlocking commercial synergies that regulatory constraints prevented the teams from pursuing before closing. The teams that previously competed aggressively are now collaborating, and the speed of this cultural integration has exceeded management's expectations.

Argentina exemplifies the strategic value of this integration. Bunge is now the largest and lowest-cost crusher in a country whose economy is stabilizing under reduced export taxes. This positioning is significant as Argentina is poised to become highly competitive in global wheat, barley, and oilseed markets. The combined company's expanded origination footprint in Argentina feeds directly into its Brazilian wheat milling operations and global export programs, creating value chain efficiencies that ADM's more U.S.-centric model cannot match. As Gregory Heckman noted, "where Argentina in the past could be disruptive, we wouldn't have the opportunity to benefit as much... Now what that does for our footprint on origination as well as on—especially on soy crush and on soft crush is we're much more balanced globally."

The Repsol (REPYY) partnership in Europe demonstrates another dimension of differentiation. By divesting 40% of its Spanish operations to create a joint venture focused on lower carbon intensity feedstocks for renewable fuels, Bunge is creating alternative paths to decarbonization while retaining operational control. This strategy positions the company at the forefront of Europe's biofuel transition without bearing full capital risk, a structural advantage over competitors pursuing go-it-alone strategies.

Financial Performance: Evidence of Transformation in Real-Time

Bunge's financial results for the first nine months of 2025 provide clear evidence that the Viterra merger is delivering on its strategic promise, even as cyclical headwinds pressure near-term margins. Total segment EBIT, summing the reported segments, reached $1,659 million, representing an increase of approximately 36% from the prior year's comparable period. This was driven significantly by the Soybean Processing and Refining segment's remarkable 131% surge to $1,068 million. This performance demonstrates that despite global margin pressure, Bunge's enhanced scale and operational capabilities are generating substantial profit growth.

The Soybean Processing and Refining segment's performance tells a compelling story of global rebalancing. Net sales increased 38.2% in Q3 to $10,857 million, while EBIT jumped 51.8% to $337 million. Management attributes this to "higher margins, strong execution, and the integration of Viterra's South American assets." The key insight is geographic diversification: North American processing results increased while refining faced pressure, South America saw higher results in both processing and refining, and European and Asian destination markets contributed strongly. This global balance means Bunge can optimize crush location based on relative margins, a capability that directly counters the single-region risk that has historically plagued the industry.

Softseed Processing and Refining shows a similar but more nuanced pattern. Q3 EBIT surged 78.8% to $236 million. However, nine-month EBIT declined 35.7% to $337 million, reflecting the challenging margin environment in North America and Europe earlier in the year. This reveals the transaction's timing benefit: Viterra's assets are performing well when Bunge's legacy assets faced pressure, demonstrating the portfolio diversification value of the merger.

Grain Merchandising and Milling presents the most complex picture. Q3 EBIT collapsed 73.5% to just $21 million, yet nine-month EBIT increased 9.9% to $254 million. The volatility reflects the segment's inherent sensitivity to harvest timing and market volatility. Management candidly calls Q3 a "funny quarter" between global harvest seasons. This volatility obscures the underlying value creation: the combined company's larger grain handling footprint and expanded storage capabilities will generate more stable earnings through storage income, drying, handling, and blending fees. As John Neppl explained, "the combined grain business is expected to offer more stability in earnings," transforming a historically volatile business into a more predictable cash generator.

The balance sheet reflects the transaction's scale but also its strategic funding. Total debt increased to $15,589 million from $6,238 million at year-end 2024, primarily to finance the Viterra Acquisition. However, the company maintains ample liquidity with $9.7 billion in unused committed credit facilities and has already begun deleveraging, repaying $1 billion of term loans in October 2025. The net debt, adjusted for readily marketable inventories (RMI), is approximately $900 million, which is manageable for a company of this scale and reflects the working capital intensity of the business model.

Outlook and Execution: Policy Clarity as the Catalyst

Management's guidance for full-year 2025 adjusted EPS of $7.30 to $7.60 reflects a nuanced understanding of both cyclical pressures and structural improvements. The midpoint implies a second-half EPS of approximately $4.13, representing a significant acceleration from the first half. This signals confidence that the cyclical trough is passing and that operational improvements will drive earnings growth even before full synergy capture.

The key assumption underpinning this outlook is biofuel policy clarification. Gregory Heckman expects the final RVO proposal by year-end or early 2026, with "significantly higher volumes" and full SRE reallocation. This policy shift would unlock demand for the industry's substantial underutilized capacity, particularly for soybean and canola oil where Bunge now holds leading positions. The 45Z policy's removal of indirect land use charges (ILUC) would make North American feedstocks more competitive, directly benefiting Bunge's expanded crush footprint. This policy leverage creates asymmetric upside: the downside is limited in a low-margin environment, while policy clarity could drive margin expansion across Bunge's global processing network.

Harvest timing provides near-term earnings visibility. Management expects a "meaningful improvement" in Grain Merchandising and Milling in Q4 2025, driven by North American, European, and Australian wheat and canola harvests. Australia's "real big crop" of wheat, barley, and rapeseed is particularly significant given trade tensions between Canada and China that are redirecting canola flows. This demonstrates the value of Viterra's origination assets: Bunge can now capture margin from origination through export, using its expanded storage and handling network to optimize timing and quality premiums.

Synergy capture follows a deliberate timeline. Management expects "a bigger jump in the benefit from synergies" in 2026, with 2027 representing a "big, big step change." The $101 million in Q3 acquisition and integration costs are front-loaded investments in systems integration and cultural alignment. This sets realistic expectations: the merger's full earnings power won't be visible until 2027, but the trajectory is clear and the early indicators are positive, with Viterra contributing strongly to soy and soft processing results.

Risks: What Could Break the Thesis

The most material risk is integration execution at scale. The Viterra merger combines two large, complex organizations with different cultures, systems, and accounting standards (IFRS to GAAP). While management reports that cultural integration is proceeding "about as well as we could have hoped," the $171 million in nine-month acquisition costs and increased corporate expenses demonstrate the complexity. Any slowdown in synergy realization would extend the period of elevated debt and compressed margins, potentially testing investor patience.

Biofuel policy uncertainty remains a critical swing factor. If RVO proposals disappoint, SRE reallocation is incomplete, or 45Z implementation faces delays, the spot market behavior that has compressed margins could persist into 2026. John Neppl's observation that "we're one big weather event away from markets that could get interesting" cuts both ways: while weather could create volatility and merchandising opportunities, it could also disrupt the harvest-driven Q4 improvement management expects.

Debt levels, while manageable, constrain strategic flexibility. The debt-to-equity ratio of 1.03 is elevated compared to ADM's 0.40, and interest expense increased 59% in Q3 to $202 million. A hypothetical 100 basis point rate increase would add $93 million in annual interest expense. This amplifies the cost of any operational missteps and limits Bunge's ability to pursue additional acquisitions or accelerate buybacks until leverage ratios improve.

Competitive pressure from ADM remains intense. While Bunge's Q3 execution outpaced ADM's guidance cuts, ADM's deeper nutrition segment provides margin stability during commodity downturns. If ADM accelerates cost cuts or gains processing share in key markets, Bunge's margin recovery could be slower than anticipated. The elevated global stocks-to-use ratios benefit buyers over processors, potentially extending the margin trough.

Valuation Context: Pricing a Transformation

At $96.07 per share, Bunge trades at a market capitalization of $19.22 billion and an enterprise value of $33.83 billion. The trailing P/E ratio of 10.8 and forward P/E of 10.3 reflect market skepticism about cyclical recovery, while the EV/EBITDA multiple of 16.2 sits above ADM's 14.8 but below historical peaks for the sector.

This valuation prices Bunge as a traditional cyclical commodity processor rather than a transformed value chain orchestrator. The price-to-operating cash flow ratio of 34.9 appears elevated, but this reflects the working capital intensity of the Viterra integration rather than underlying cash generation weakness. Adjusted for the $1.2 billion in year-to-date adjusted funds from operations and the $900 million in discretionary cash flow after sustaining capex, the underlying cash generation capacity is robust.

Comparing Bunge to peers reveals the transformation premium. ADM (ADM) trades at similar revenue multiples (0.35x vs Bunge's 0.32x) but carries a much higher P/E (24.7x) due to its nutrition segment's growth profile. However, ADM's operating margin of 1.95% trails Bunge's 2.19%, and its ROE of 5.24% is nearly half Bunge's 9.76%. This suggests Bunge's integration strategy is already delivering superior operational efficiency, yet the market hasn't awarded a corresponding valuation premium.

The dividend yield of 2.91% provides downside protection while investors wait for synergy realization and policy clarity. With a payout ratio of just 31%, the dividend is secure even in the current trough, and management's commitment to returning capital is evidenced by $545 million in year-to-date share repurchases. The remaining $255 million on the Viterra-related buyback authorization signals confidence in long-term value creation.

Conclusion: A Transformed Competitor at the Cycle's Bottom

Bunge Global has executed a strategic transformation that positions it to capture disproportionate value as agricultural markets recover from their current trough. The Viterra merger creates a globally balanced value chain orchestrator with enhanced origination capabilities, processing scale, and merchandising optionality that competitors cannot easily replicate. This structural improvement enables Bunge to generate higher returns throughout the cycle while reducing earnings volatility.

The biofuel policy overhang that has compressed margins into a spot market environment is creating asymmetric upside. With substantial underutilized industry capacity and Bunge's expanded crush footprint, any policy clarity will drive margin expansion across all processing segments. Argentina's stabilization provides a near-term catalyst, while U.S. RVO proposals and 45Z implementation offer medium-term leverage.

The investment thesis hinges on two variables: the pace of Viterra synergy capture and the timing of biofuel policy clarity. Management's guidance suggests both will improve materially in 2026, with step-function gains in 2027. At current valuations, the market prices Bunge as a traditional cyclical, ignoring the durable competitive advantages created by the merger. For investors willing to look through integration noise and policy uncertainty, the risk/reward is compelling: a transformed global leader positioned for higher lows and higher highs, trading at trough-cycle multiples.