February 2, 2011

 

 

Archer Daniels Midland (ADM) crushed Wall Street predictions and reached an all-time high from record export trade and a right call on the corn price rally.

 

Shares in the agricultural trading giant closed up 6% at their highest for more than two years.

 

ADM reported earnings up 29% to US$732 million for the October-to-December quarter, equivalent to US$1.14 a share - well ahead of the US$0.78 a share that analysts had expected.

 

The improvement, which contrasted with a disappointing performance the previous quarter, reflected an "outstanding performance across the board", Patricia Woertz, the ADM chairman and chief executive said.

 

"We used our vast global network to deliver for our customers and shareholders," he added, echoing an assertion from rival Cargill of the advantages of scale in a period of volatility in world commodity markets.

 

However, the group's performance was particularly strong in agricultural services - its biggest-earning division - where profits near-trebled to US$426 million thanks to handling a record volume of US shipments as, with rival exporters such as Russia sidelined, food commodity importers increasingly turned to American supplies.

 

In the corn processing division, profits rose by one-third to US$399 million, despite obstacles to margins presented by lower prices for corn sweeteners and robust grain markets.

 

Indeed, the unit's profits were enhanced by "favourable corn ownership positions", besides raised margins on ethanol and lysine, a nutritional supplement.

 

The performance contrasts strongly with ADM's results in the July-to-September quarter, which fell way below Wall Street hopes after the agricultural services division was caught out by the knock-on effects on world crop trade of Russia's grain export ban.

 

And the group raised hopes for trading conditions remaining supporting with world demand for crops and processed products remaining "strong", despite soaring prices.

 

"Global demand for protein meal is being led by good demand from Asia," ADM said.

 

Meanwhile, its corn processing operations looked set to benefit from firm demand in Mexico for sweeteners based on the grain and, in ethanol, by the extension America's blender's tax credit and by promising export prospects.

 

"US corn-based ethanol remained the most competitive ethanol in the global market," the company said.

 

ADM shares touched US$35.20 in early deals in New York, their highest since June 2008, before easing to close at US$34.70, up 6.2% on the day.