August 2, 2004

Archer Daniels Midland Sees Favorable N. America Soybean Margins

Capacity-utilization rates in Archer Daniels Midland Company (ADM)'s soybean-processing facilities are running around 80% in North America and 83% in Europe. In South America, however, the company faces operating margin challenges. Archer Daniels capacity utilization is only around 70% in that region, and more capacity is expected to come onstream by competitors.

With global animal production to remain strong, Archer Daniels expects good demand for soybean meal, a key ingredient in feed and a byproduct of soybean processing, to underpin its soybean complex.

Archer Daniels expects a good corn crop this year and that will help lower the company's overall net corn costs.

Expected healthy crops bodes well for Archer Daniels' agriculture-services division, although it expects lower volumes during the transition from last year's small crop to this year's more bountiful harvest.

Archer Daniels does not expect delivery disruptions or other complications due to the much-publicized bottlenecks in parts of the U.S. rail system.

"ADM has substantial assets in railcars, barges and trucks and is favorably positioned to deal with this developing situation and give strong support to our processing assets as well as to our customers," Peterson said.

Archer Daniels has about 20,000 railroad cars, 2,000 barges on river systems and about 100 ships under charter.