April 30, 2008Archer Daniels Midland Co. cashed in on volatile prices and heavy demand for the corn, soybeans and wheat it processes to generate a 42 percent increase in third-quarter profits. Though ADM's results announced yesterday easily beat Wall Street expectations, investors seemed to doubt that the company could sustain the same pace amid such fickle markets, and the share price dropped sharply. Profits grew to $517 million, or 80 cents per share, compared with a year-ago profit of $363 million, or 56 cents per share. Revenue surged more than 64 percent to $18.71 billion. Analysts had projected earnings of 70 cents per share on revenue of $13.45 billion. Results were driven by a $366 million profit at ADM's Agricultural Services division, nearly eight times the unit's $46 million profit in the year-ago quarter. The division includes the company's grain transportation and handling services, which continues to move last year's large corn crop and other commodities in high demand. The division also includes a large grain-trading operation that tries to profit shifts in commodity prices and buffers ADM against price spikes. Corn prices set a record high above $6 a bushel during the quarter. ADM is the nation's second-largest producer of ethanol, the largely corn-based fuel additive with plenty of critics, including ADM customers. Food processors say the vast amount of corn used to produce ethanol is driving up the cost to make feed for livestock. Just under one-quarter of last year's U.S. corn crop was used to make ethanol, up from 18 percent in 2006, according to the National Corn Growers Association, an industry trade group. Jack
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