An Untethered Elephant

Regular readers will know that I have recently been focusing on regional and national players expanding their market share at the expense of the ABCD++ group of global agricultural commodity traders. However, while I have been paying attention to that, an elephant has quietly entered the room. (1)

I have long admired Tether’s business model and wish I had conceived it first. While many cryptocurrencies fluctuate wildly in value, Tether’s USDT stablecoin is pegged one-to-one to the US dollar. This makes it an ideal payment method for those who want to keep their transactions private or lack immediate access to international payment systems. Unlike Bitcoin, it also provides a stable store of value against the US dollar.

Tether generates profits by earning interest on the roughly $181 billion it holds in reserves, which clients can use to convert their stablecoins back into dollars. The company primarily invests these reserves in Treasury Bills, as well as in gold and Bitcoin. It holds over 100 tonnes of gold bullion in Swiss vaults, making it comparable to a mid-sized central bank in physical terms.

Tether has generated $10 billion in revenue through the end of September and expects full-year profits of nearly $15 billion, up from $13 billion last year. However, Bitcoin (BTC) has fallen 7 per cent so far this year, and some analysts wonder whether Tether can reach that $15 billion mark. The company’s profitability is not foolproof; it is susceptible to lower interest rates and declines in gold and BTC prices, even if its reserves 100% back its capacity to redeem. (I still wish I had come up with the business model.)

Over the past two years, Tether has used its profits (not its reserves) to acquire and finance tangible assets across commodities, energy, and agriculture sectors. The company has established a separate Trade Finance / Tether Investments division to reinvest profits into the real economy. Commodity trade finance has become one of the primary early beneficiaries.

This is a positive development and fills a noticeable gap in the market. Over the years, it has become increasingly challenging for second- or third-tier companies to obtain trade finance. An official from Rabobank once told me,

The level of due diligence required now means smaller merchants will face increasing difficulties in securing financing. We do not have the authority to do business with companies holding less than $25 million in capital because the income potential from such clients is too limited, and the risk is too high.

Tether has filled that void. Its trade-finance division now allocates $1.5 billion to commodities traders through short-term loans, pre-export finance, and receivables-backed structures, with plans to increase this to $3–5 billion over the next couple of years.

The transactions Tether highlights resemble those of any physical merchant—just funded from a vastly different balance sheet. One deal in 2024 financed approximately 670,000 barrels of Middle Eastern crude, valued at roughly $45 million, and covered loading and transport on a secured basis.

Alongside entering commodity trade finance, Tether has used its profits to acquire a 74.7 per cent majority stake in Adecoagro S.A., the NYSE-listed South American agricultural and renewable energy group.

Adecoagro ranks among Latin America’s largest integrated agri-energy firms, with extensive landholdings in Argentina, Brazil, and Uruguay. Approximately 94 per cent of that landbank is located in Argentina, with an emphasis on high-potential regions in the Pampas and the north. The company farms 240,000 hectares of corn, wheat, soybeans, peanuts, and sunflowers, and owns two grain storage and handling facilities and two processing plants.

In Brazil, the group’s three sugar-ethanol mills crush approximately 210,000 hectares of cane (owned, leased, and third-party), collectively processing over 12.8 million tonnes annually and exporting more than 1,000,000 MWh of renewable electricity from bagasse-fired cogeneration (see below). Adecoagro’s renewable energy output provides a natural hedge and supply basis for Tether’s Bitcoin-mining and digital infrastructure ambitions in the region.

The company cultivates rice on 64,000 hectares of mostly leased land and owns six rice mills, four in Argentina and two in Uruguay, which process approximately 400,000 metric tonnes annually. It also owns a manufacturing plant for rice snacks.

Should I include Adecoagro among my list of regional champions?

Adecoagro is the largest farmer in Argentina, but the company also processes much of its produce, including milk, rice, and peanuts. It also owns retail brands and markets directly to final consumers in Argentina.

It exports sugar, ethanol, rice, peanuts, some grains/oilseeds, and milk products, but it holds a minor share of total exports, except for rice and peanuts, where its share is higher. Some of those exports are not shipped directly but are sold locally to Cargill, Bunge, Cofco, and others.

As such, I don’t believe Adecoagro is a regional champion like AMAGI or ACA. The company is not large enough in overall exports.

Adecago has recently entered the fertiliser sector, having submitted a binding bid to acquire YPF’s 50% stake in Profertil, South America’s largest granular urea producer, which supplies about 60% of Argentina’s consumption. The US$600 million deal would increase Adecoagro’s stake in Profertil to 90%. The company plans to finance the transaction through cash reserves, a committed long-term credit facility, and equity proceeds.

A friend told me that Tender had acquired Adecoagro as a platform to expand stablecoin-based payments into agricultural exports and regional value chains. However, Adecoagro’s limited involvement in export flows indicates that it was not the primary driver of the acquisition.

He also argued that Adecoagro could serve as a platform for tokenising agricultural and energy assets, as well as future production streams. However, it does not appear to be a priority for Tether, despite Adecoagro holding a minority stake in the startup Agrotoken.

Tether is a hybrid player in the commodity world: part shadow central bank, part private‑equity fund, part trade‑finance house. A commodity industry executive recently told the FT that Tether is the “weirdest company” he has ever dealt with. ($)

But perhaps that’s precisely what the commodity sector needs: new entrants with substantial capital, innovative ideas, and an unconventional approach - especially if they address that noticeable gap in trade finance for smaller businesses.

What are your thoughts?

© Commodity Conversations® 2025

1. Try Googling “The Tethered Elephant.” It has nothing to do with commodities, but I found the results fascinating nonetheless.

2. Click here for further details on Adecoagro, including financial information.