Corteva's Q3 2025: Contradictions Emerge on Crop Protection Pricing, Seed Acreage, and Tariff Impacts

Business Commentary:

• Strategic Decision and Separation Announcement:
• Corteva announced its intent to separate into two public companies, aiming for a second half 2026 separation.

• The decision is driven by the belief that separating the Seed and Crop Protection businesses will allow each to pursue their distinct opportunities more effectively.

• Strong Financial Performance and Guidance Increase:

• The company reported over $600 million in controllable benefits this year, exceeding the previous estimate of $530 million.

• The full-year operating EBITDA guidance was raised to $3.8 billion to $3.9 billion due to strong performance and favorable currency impacts.

• Seed Business Growth and Market Share:

• Corteva's Seed business reported $200 million in productivity and deflation benefits and $90 million in royalty improvement.

• This growth is attributed to strong market positions, particularly in North American corn, and increased soybean out-licensing in Brazil.

• Crop Protection Business and Product Pipeline:

• The Crop Protection business is expected to deliver over $500 million in productivity and cost benefits, including significant reductions in seed commodity costs.

• Growth is driven by a focus on differentiated technology and new product launches like the new next-gen insecticide active, Varpelgo.

• Global Market Dynamics and Demand:

• Corteva anticipates a continuation of record demand for grains, oilseeds, meat, and biofuels in 2026.
• Global trade discussions, such as China's commitment to buy soybeans, are supporting market stability and demand.
  

Contradiction Point 1

Crop Protection Pricing Dynamics

It involves differing perspectives on the stability and trajectory of crop protection pricing, which directly impacts the company's financial performance and market strategy.

Could you outline agrochemical pricing trends and 2026 growth projections? - Joshua Spector(UBS Investment Bank)

2025Q3: 2026 growth will be driven by volume, with stable pricing globally, except for Brazil. On-farm demand is strong, and we expect pricing stability after competitive pressures decrease. - Charles Magro(CEO)

What is the current state of global CP pricing, and are prices stabilizing or worsening? - David L. Begleiter(Deutsche Bank)

2025Q2: CP pricing is flat in most regions, with stable imports in Brazil. Pricing is expected to continue improving as demand remains stable and supply tightens. - Robert King(COO)

Contradiction Point 2

Seed Acreage Expectations

It involves differing expectations regarding the trajectory of seed acres, particularly in Latin America, which is crucial for the company's growth strategy.

How did Corteva perform in the northern hemisphere in terms of market share? - Patrick Fischer(Goldman Sachs)

2025Q3: We gained corn and soy market share, driven by strong product performance and pricing strategy. - Judd O'Connor(COO)

How are you assessing potential outcomes for the back half, including Brazil's pricing challenges, seed acreage expectations, and cash flow impacts? - Vincent Andrews(Morgan Stanley)

2025Q2: Acres are expected to increase by mid-single digits in Latin America, with strong order books in Brazil. - David Johnson(CFO)

Contradiction Point 3

Crop Protection Pricing Strategy

It reflects differing perspectives on the crop protection pricing strategy and the stability of pricing, which directly impacts revenue projections and investor expectations.

Can you discuss crop chem pricing trends and 2026 growth expectations? - Joshua Spector (UBS Investment Bank, Research Division)

2025Q3: 2026 growth will be driven by volume, with stable pricing globally, except for Brazil. On-farm demand is strong, and we expect pricing stability after competitive pressures decrease. - Charles Magro(CEO)

Are pricing trends in crop protection changing? - Vincent Andrews (Morgan Stanley, Research Division)

2025Q1: The pricing trend is expected to even out by year-end, stabilizing with healthier channel demand. This is driven by stabilization in China's generic pricing and higher margins from premium Biologicals and new products. - Robert King(EVP, Crop Protection Business Unit)

Contradiction Point 4

Impact of Tariffs on Financial Guidance

This disagreement highlights the impact of tariffs on financial guidance, which is crucial for investor forecasting and financial planning.

Can you discuss the credit market conditions for Latin American growers and their impact on Corteva? - Kevin McCarthy (Vertical Research Partners, LLC)

2025Q3: The overall tariff impact is estimated at $50 million, manageable within the guidance range. Mitigation strategies are being finalized, with updates expected after the first half. The guidance reflects core business without tariffs to maintain clarity. - Chuck Magro(CEO)

Can you explain the assumptions regarding tariffs and their impact on guidance? - Josh Spector (UBS)

2025Q1: The guidance reflects core business without tariffs to maintain clarity. - Chuck Magro(CEO)

Contradiction Point 5

Credit Market Conditions and Risk Management

This contradiction involves the company's approach to managing credit market risks, particularly in Latin America, which could impact financial stability and strategic decision-making.

Can you explain the credit conditions in Latin America for growers and how they affect Corteva? - Kevin McCarthy (Vertical Research Partners, LLC)

2025Q3: Credit conditions are challenging, with higher borrowing costs and increased bankruptcies. We manage risk by reducing exposure to national distributors and using a robust barter system. Losses have been minimal, and we maintain strong financial health. - David Johnson(CFO)

Why is Seed's competitive pricing in Latin America continuing? - Edlain Rodriguez (Mizuho)

2024Q4: We're managing down our exposure to national distributors. As a percent of our business, we have reduced this exposure over the past 2 years by 50%. We now have broad-based relationships, and we're focused on the digital credit capabilities and on the barter system. - David Johnson(CFO)