Jefferies Previews ADM's F3Q11 Results

Archer Daniels Midland Company's (NYSE: ADM) F3Q11 EPS likely to feature “numerous pushes and pulls, but we expect another quarter of very strong Ag Services margins (global commodity dislocation tailwind) and favorable commodity positioning to drive another quarter of EPS upside,” Jefferies reports.

“We've modeled an Ag Services EBIT margin of 3.6% in F3Q11, up 120 bps vs. the year-ago number and down 40 bps vs. F2Q11,” Jefferies writes. “Global commodity dislocation provided a sizable volume and margin tailwind for the segment in the December quarter, with ADM delivering record company export volumes out of the U.S.

“A closer look at the segment's historical profitability trends strongly suggests that once global dislocation and commodity price volatility emerge, elevated profitability levels will demonstrate staying power. In other words, once the margin pendulum begins to swing in the Ag Services segment, it does not change direction quickly.”

Archer Daniels Midland closed Monday at $35.69.