Geoffrey Smith 

Investing.com — Archer-Daniels-Midland (NYSE:) stock rose in premarket trading on Tuesday after the agricultural trading giant reported a sharp rise in profit due to tightness in global grain markets – a phenomenon it expects to last for years.

While adjusted per share rose 37% over a previous year to $1.90 and operating profit rose 30% from $1.56 billion to $1.56 Billion, strong performances were seen from all the main divisions. Due to the ability to improve margins through value-adding operations like crushing and refining, the largest division of agricultural services and oilseeds posted more than $1 billion in operating profits.

ADM stock rose by 3.7% in 8 AM ET (11200 GMT), after it had risen more than 50% in five months.  

“Looking forward, we expect reduced crop supplies — caused by the weak Canadian canola crop, the short South American crops, and now the disruptions in the Black Sea region — to drive continued tightness in global grain markets for the next few years,” said Chairman and CEO Juan Luciano in a statement.

ADM’s traditional strength in vegetable oils means it has been directly affected by the war in Ukraine, which has severely disrupted shipments of grain and sunflower seed and oil. Those disruptions threaten to extend into the current growing season: the U.K. Ministry of Defense estimates that Ukraine’s 2022 grain harvest is likely to be down some 20% from last year.

According to reports from China, Covid-related lockdowns will likely impact China’s agricultural production this year and increase its import requirements.

Online videos have been viral showing officials preventing farmers from working on their fields and accusing them of violating coronavirus restriction. The South China Morning Post reports that the South China Morning Post has reported Monday. This suggests infighting between the Ministry of Agriculture and the National Health Commission.