The Decatur-based firm that posted sales of $36.2 billion (€28.5bn) in 2003 saw operating profit rise by 14 per cent to $338.67 million for the first three months to the end of September.
Food and feed ingredient earnings rose by $29 million to $89 million "due to improved operating results from our cocoa operations and improved earnings of the GRUMA corn flour venture".
Sweeteners and starches felt the impact of ongoing price tightness in the corn market, despite a slight relief in stocks, that saw operating profit for the sector falling by over 38 per cent to $54.9 million.
Food makers and ingredients firms have all seen margins squeezed by rising prices for basic food commodities. In each of the last four years, world grain production has fallen short of consumption, forcing a draw-down of global stocks for wheat, rice, corn and soybeans. Soybean prices recently hit 15-year highs and wheat and corn seven-year highs.
But relief in margins is starting to filter through as 2004 harvests - soy, corn and wheat - prove to be greater than the previous year. The United Nations backed Food and Agriculture Organisation (FAO) last month raised its latest 2004 cereal output forecast by 29 million tonnes to 1985 million tonnes, up from its previous projection in June 2004.
"International prices for most cereals have fallen since June, while international cereal prices in 2004/05 should be less volatile than earlier expected,"said Henri Josserand, chief of FAO's Global Information and Early Warning System.
Investment bank Goldman Sachs recently warned however that corn prices are still exposed warning last month that the then market price - December corn closing at 218cts/bu on September 14 - does not reflect a 'sufficient risk premium given the historically low level of inventories,' and remains extremely vulnerable to an 'upside in price opportunity'.
"Given the low inventory levels, we believe corn will remain vulnerable to supply disruptions, particularly weather and disease, until the US harvest is complete in late October/early November," said the bank.
The firm recently ended a long running lawsuit in the US that might have cost billions of dollars had the case reached court, paying $400 million to settle an anti-trust lawsuit on high fructose corn syrup, a popular sweetener used by soft drinks giant Coca-Cola and PepsiCo. ADM joined Tate & Lyle's AE Staley firm and Cargill who have also made settlements under the same lawsuit. The lawsuit caused ADM to post a $103 million loss in the quarter ended June 30, the fourth quarter of its fiscal year.