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Boost from 'surging' US grain exports sends ADM shares soaring

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Shares of the agricultural giant Archer Daniels Midland jumped over 6%, as profits beat expectations thanks to "surging" US exports.

ADM reported increased demand for its grain trading services, as buyers turn to North America due to tighter markets in South America.

"With improving market conditions and a large US harvest, combined with the team's solid execution capabilities, we feel good about the remainder of the year and a stronger 2017," said ADM chairman and chief executive Juan Luciano.

"After working through the challenging environment in the first half of the year, we capitalized on improving operating conditions in the third quarter and are positioned well for a solid finish to the year," Mr Luciano said.

Higher US grain exports

The improved outlook was driven to a large extent by an improving outlook for ADM's grain trading arm.

"In ag services, merchandising and handling results were up due to increased volumes and improved margins as crop shortages in South America accelerated this year's seasonal shift in global demand to North America," ADM said.

ADM said that US exports had "surged" over the three months to September 30, thanks to slower Latin American exports which mean the the market "relied heavily on US exports of corn and soybeans".

Lower soybean crush margins

But one fly in the ointment was the oilseeds processing business, where "results declined significantly versus a very strong year-ago quarter due to lower soy crush margins".

Oilseed results from Asia were also hit by losses from palm producer Wilmar.

Returns from ADM's trading arm were lower, while the heavy exports supported transportation returns.

Offers expected for dry-milling ethanol

ADM continues its plan to get out of the ethanol dry-milling business.

The company is aiming to sell-off its dry-milling corn ethanol facilities, in favour of wet-milling facilities which can readily switch between ethanol production, and the production of other corn products such as starch and sweeteners.

ADM expects to have received final proposals for the dry-milling business by the end of 2016.

Shares rally

ADM reported adjusted operating profits in the three months to September 30 were reported at $650m, down 5.0% year on year.

Adjusted earnings per share were down 1.7%, at $0.59, beating analyst estimates of $0.46.

But revenues fell to $15.83bn, down 4.5% year-on-year, missing analyst forecast of $16.28bn.

ADM shares were up 5.9%, at $46.14 a bushel in morning deals in New York.

By William Clarke

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