August 6, 2014

Bumper US soy and corn crop boosts Archer Daniels Midland's profit

 

A second straight year of bumper US crops will boost Archer Daniels Midland Co.'s grain-trading profits by driving greater volumes, as the commodities-trading firm tweaks its grain terminals and logistics operations ahead of an anticipated record US soybean crop and a corn crop that could surpass last year's record 13.93 billion-bushel harvest.

ADM, among the world's largest dealers and processors of agricultural products, is benefiting from rising US grain and oilseed output, with supplies from last year's North American harvests replenishing its operations after a severe drought in 2012 diminished grain stockpiles and pinched ADM's trading profits.

ADM President Juan Luciano projected harvests in North America and Europe would help lift quarterly profits in ADM's agricultural-services unit to the high end of the division's historical range of US$200 million to US$250 million.

In agricultural services, ADM's biggest business unit in terms of sales, crop-trading income climbed about eight-fold to US$115 million, as higher exports improved profits over results affected by drought a year earlier.

ADM's crop-trading business, which draws grains and oilseeds from farmers at about 470 facilities around the world and funnels them to ADM's own processing plants and those of customers, is poised to stay strong as US farmers prepare to bring in this year's harvest and pump more supplies into the system, officials said.

Cheaper corn also helped lift profits in ADM's corn-processing business, where the company ranks among the biggest producers of corn ethanol.

Revenue fell 4.6% to US$21.5 billion, reflecting a slowdown in ADM's South American soybean purchasing and lower prices for some of its corn-based sweeteners and starches.