The Decatur-based firm that posted sales of $36.2 billion in 2003 saw operating profit rise by 14 percent to $338, 672 for the first three months to the end of September.
Food and feed ingredient earnings rose by $29 million to $89 million "due to improved operating results from our cocoa operations and improved earnings of the GRUMA corn flour venture".
Sweeteners and starches felt the impact of ongoing price tightness in the corn market, despite relief in other commodities, that saw operating profit for the sector falling by over 38 percent to $54,880.
Food makers and ingredients firms have all seen margins squeezed by rising prices for basic food commodities. In each of the last four years world grain production has fallen short of consumption, forcing a draw-down of global stocks for wheat, rice, corn and soybeans. Soybean prices recently hit 15-year highs and wheat and corn 7-year highs.
But relief in margins is starting to filter through as 2004 harvests - soy, corn and wheat - prove to be greater than the previous year. The United Nations backed Food and Agriculture Organisation (FAO) last month raised its latest 2004 cereal output forecast by 29 million tonnes to 1985 million tonnes, up from its previous projection in June 2004.
"International prices for most cereals have fallen since June, while international cereal prices in 2004/05 should be less volatile than earlier expected,"said Henri Josserand, chief of FAO's Global Information and Early Warning System.
Investment bank Goldman Sachs recently warned however that corn prices are still exposed warning last month that the then market price - December corn closing at 218cts/bu on 14 September - does not reflect a 'sufficient risk premium given the historically low level of inventories,' and remains extremely vulnerable to an 'upside in price opportunity.'
"Given the low inventory levels, we believe corn will remain vulnerable to supply disruptions, particularly weather and disease, until the US harvest is complete in late October/early November," said the bank.
A recent $400 million settlement of a lawsuit over prices of high-fructose corn syrup, a sweetener used extensively in the US, particularly in soft drinks, caused the company to post a $103 million loss in the quarter ended 30 June, the fourth quarter of its fiscal year. But that settlement ended the company's exposure to significant legal costs, Andreas said.