Chicago | Reuters — U.S. agricultural products trader Archer Daniels Midland on Tuesday reported a far better-than-expected third-quarter profit as higher U.S. exports of corn and soybeans boosted volumes and margins, sending shares up sharply.
U.S. farmers have nearly completed what is expected to be the largest corn and soybean harvests on record, which should benefit ADM again in the current quarter.
“With improving market conditions and a large U.S. harvest, combined with the team’s solid execution capabilities, we feel good about the remainder of the year and a stronger 2017,” CEO Juan Luciano said in a statement.
ADM shares jumped nearly eight per cent to $46.91, the biggest one-day percentage gain in over seven years (all figures US$).
Chicago-based ADM and agribusiness rivals such as Bunge and Cargill make money buying, selling, storing, transporting and processing grains and oilseeds around the world. Margins are typically thin, but volumes are massive when crop supplies are abundant and demand is strong.
Export sales of corn and soybeans from the U.S., home to the bulk of ADM’s assets, were well ahead of the normal pace in the third quarter due to crop shortages in South America.
All eyes are now on Bunge, which reports quarterly results on Wednesday and has a larger presence in South America.
“For ADM, their South American business was soft so we remain cautious on Bunge’s quarter,” said Farha Aslam, analyst with Stephens Inc.
Net earnings attributable to ADM rose to $341 million, or 58 cents per share, in the quarter, from $252 million, or 41 cents, a year earlier.
Processing volumes were about steady with a year ago, but revenue fell 4.4 per cent to $15.83 billion, reflecting lower commodities prices.
Excluding items, ADM earned 59 cents per share, beating the average analyst estimate of 46 cents a share, according to Thomson Reuters I/B/E/S.
ADM’s agricultural services unit, its largest in terms of revenue, saw profit jump 31 per cent from a year earlier while corn processing results rose 30 per cent amid low prices for the grain.
ADM said it expects final proposals for a deal for its ethanol-producing corn dry mills by the end of 2016. The company is looking to divest the assets amid persistently thin margins for making the biofuel.
Oilseeds processing results were hit by weak margins and a quarterly loss at Wilmar International. ADM owns 23 per cent of the Singapore-based oils processor.
— Karl Plume reports on agriculture and ag commodity markets for Reuters from Chicago. Additional reporting for Reuters by John Benny in Bangalore.