Bumper harvests and surging exports of corn and soyabeans helped Archer Daniels Midland post upbeat third quarter profits, lifting its shares to their highest point in a year. Investors also sweetened on the international agricultural trader’s shares as it predicted that improving market conditions would extend into next year.
ADM shares were up 7 per cent to $46.81 by midday on Tuesday — the highest since October 2015 — after the company said that the headwinds it faced in the first half of the year had largely receded by the third quarter, allowing it to capitalise on improving market conditions and crop shortages in South America that lifted North American exports.
The company reported earnings per share of 58 cents on net income of $341m for the third quarter, compared to the 46 cents per share on a $270.6m profit that analysts surveyed by Bloomberg had expected. While revenue clocked in at $15.3bn, shy of the expected $16.28bn, ADM said that it expected that the rising tides it rode during the third quarter would last through the end of the 2016 and into the new year.
The North American harvest “is progressing well as we’re seeing record yields and production for both corn and soyabeans,” said chief executive Juan Ricardo Luciano during a conference call with investors. “We expect this to translate into continued solid results for export volumes and better global merchandising and handling opportunities as we finish out the year.”
Also helping to lift the company’s quarterly results was strong demand for corn-based sweeteners and starches, executives said.
ADM is benefiting from the same crop export wave that lifted overall US economic growth during the past three-month period. Exports grew at an annualised pace of 10 per cent, thanks in part to increased overseas demand as heavy floods destroyed soyabean crops in Argentina.
ADM shares have gained 2.5 per cent over the past year.
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