ADM Profits Soar; CEO Lashes Out at Ethanol Critics

Archer Daniels Midlands' ethanol business is down, and its costs are growing. Costs are also squeezing its mainstay corn syrup operations and its oilseeds-processing business. And yet on Tuesday, it released third-quarter results showing profits up by 42 percent and sales up by 64 percent.

That's because ADM plays both sides of the market. It's a huge buyer of grains, to be sure. But through its agricultural services unit, it's also a major player on the supply side. The company operates 350 grain elevators from which it ships grain to itself and other buyers.

ADM's "global, diversified, fully integrated value chain is an enormous undervalued asset in the current agriculture operating environment," wrote Morgan Stanley's Vincent Adams in a report on Monday. The "current agriculture operating environment" is one of volatile, most soaring, grain prices.

"The ADM trading desk played this volatile market like a Stradivarius violin," wrote the Motley Fool's Choy Leng Yeong.

Still, Wall Street wasn't as wowed as you might think. Traders sent the company's stock a few points lower. That seems to be in part because of the weak ethanol business, and because of ADM's declaration, during a conference call with analysts, that its plans to build $2.5 billion worth of ethanol plants have faced "substantial" delays due to weather and other problems.

But the company is still banking on ethanol. Pat Woertz, the chairman and chief executive, lashed out during the conference call at the recent backlash against the government's ethanol policies, which include subsidies, mandated production, and import tariffs. Critics say the government-driven demand for biofuels is helping to drive up the price of food.

Ms. Woertz was having none of it. Higher fuel costs, the falling dollar and rising global demand, she noted, are the chief reasons for the spike in grain prices. And that's true. But then she went on as if biofuels haven't also played a big part, without directly mentioning the government largess ADM enjoys.

"I actually find it's sad and maybe even a little ironic that these misguided attacks on biofuels is directed at the one alternative, we actually have today to transportation fuel," she said. "Retreat from biofuels is wrong, it's foolish I think it's dangerous, it's a mistake."

Further, retreating from biofuels (or from subsidies and protectionism, which is really what's at issue) is an "anti-gesture" that "won't fill anybody's stomach and won't fill any gas tanks."