News last update:6 Aug 2012

Archer Daniels Midland in 2006

Archer Daniels Midland, one of the world's largest agriculture processors, saw shares nearly double in 2006 as demand soared for processed oilseeds and corn byproducts such as ethanol. But in the wake of falling oil prices, the stock has declined, leaving investors to book gains of about 31% for the year.

With crude oil prices eclipsing $78 per barrel this summer, investors poured money into alternative energy stocks. A growing awareness of the dangers of trans-fats - which were abandoned by some fast-food chains and banned in New York City restaurants this year - also boosted demand for the company's healthier cooking oils.

Against this backdrop, Archer Daniels Midland's (ADM) earnings skyrocketed, more than doubling in its fiscal first quarter ended Sept. 30 to easily beat Wall Street estimates.

In the first half of the year, the stock surged close to 90%. But investor enthusiasm has waned in recent months, mostly as oil prices continue to cool and drive down spot prices for ethanol. Since the summer driving season ended, the price of crude has declined to the $60/barrel range and shares of ADM have shed about 23% of their value.

Patricia Woertz
In other key developments this year, the company hired former Chevron executive Patricia Woertz as chief executive to succeed G. Allen Andreas. The move was seen as affirming that its priorities lie in energy. Her hiring also made ADM the largest publicly held company led by a female CEO, ahead of Indra Nooyi at PepsiCo.

ADM said in July it plans to build a biodiesel plant in Brazil to take advantage of that country's mandate that diesel producers begin blending the alternative fuel with their products. The plant, which will use soybean oil as its feedstock, is expected to start production in 2007.

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