*

ADM shifts to pricing soy against November futures from

July in

unusual move

*

Move effectively cuts cash price offer to farmers by 6.5%

*

EPA expected to propose biofuel blend rule below industry

recommendations

By Tom Polansek and Karl Plume

CHICAGO, June 12 (Reuters) - Archer-Daniels-Midland ( ADM )

, a major U.S. soybean crusher and biofuel producer,

slashed its bids to buy the oilseed this week ahead of an

expected Trump administration announcement on biofuel blending

requirements, a primary driver of demand for soybean oil.

Processors such as Chicago-based ADM have been waiting for

the U.S. Environmental Protection Agency's decision on blending

requirements for months as they grapple with slumping crush

margins and abundant soybean stocks.

Reuters reported on Thursday that the EPA is expected to

propose blending requirements below industry recommendations on

Friday, leading to lower-than-expected demand for soyoil to be

used in biofuels.

ADM said in an emailed statement to Reuters on Thursday that

it does not have insight around the pending blending

announcement beyond publicly available information and that it

independently sets its basis bids, which is the difference

between futures and a local cash price to take possession of the

grain immediately.

The company on Wednesday rolled its cash basis bid at its

flagship Decatur, Illinois, facility to 20 cents below the

Chicago Board of Trade November soybean futures price

from 22 cents over July futures.

The roll to November futures, which closed at a 15-cent

discount to July on Thursday, lowered the local cash price by

about 60 cents a bushel, representing an unusually sharp 6.5%

drop in the price offered to farmers.

ADM also rolled basis bids at its other crushing facilities,

and some rival processors, including Cargill, followed ADM on

Thursday. Other processors kept their basis bids against the

July futures contract, but lowered basis values by up to 15

cents.

"ADM Decatur put the bean market in a frenzy," agriculture

trading company John Stewart and Associates said in a note.

Falling basis values reflect expectations for a large autumn

harvest and weak demand that has eroded processing margins for

companies that crush beans into soymeal livestock feed and

soyoil used for cooking and producing biofuels.

Crush margins have struggled as a recent jump in U.S.

processing capacity has swelled available supplies of meal and

oil and pressured prices for the soy products.

Tariff worries and unclear U.S. biofuels policies have

stoked further unease among crushers and biofuel makers, and

some biodiesel producers have scaled back or idled plants.

ADM said in April it would permanently close a South

Carolina soybean processing plant to cut costs.

"Cash crush margins stink, and there is a bunch of downtime

scheduled for July," said Charlie Sernatinger, executive vice

president for Marex Capital Markets.

Diana Klemme, vice president of Grain Service Corp in

Atlanta, which serves agricultural hedgers in the futures

markets, sent an alert to customers after seeing ADM's bid

adjustments.

She said that she had never seen a move to new-crop basis

levels in June in more than 50 years in the grain business.

"I said check your markets carefully because ADM just

dropped all their bids 40-75 cents a bushel and went to new-crop

values," Klemme said. The November futures contract represents

the autumn harvest price, or the new crop.

Farmers have been reluctant to sell crops to processors

because they want higher prices, while processors avoided

raising bids to protect their thin margins.