ADM Archer Daniels Midland Company

One of the leading food processing companies in the world Archer Daniels Midland Company (ADM), in its streak to enhance its global footprints, has opened a new feed premix plant in Tianjin, China, under its wholly owned subsidiary ADM Alliance Nutrition Inc.

The new facility has been opened in order to tap the growing Chinese market. According to the company's perspective, a large part of the Chinese market is untapped in the animal feed premix area, and so has a huge growth potential. This is the company's second feed premix plant in China with an annual production capacity of 30,000 metric tons after a facility in Dalian.

Animal feed premixes are enriched with necessary dietary components, which helped to maximize the health and productivity of animals. The Tianjin plant will offer broiler premix, layer premix, swine premix, ruminant premix, swine concentrates, specialty ingredients and nutritional consulting services to the customers located in the provinces of Henan, Hebei, Shandon, Shaanix, Anhui and the municipalities of Tianjin and Beijing.

Prior to this, ADM Alliance enhanced its product portfolio by acquiring the leading producer of liquid animal feed supplements, Cattleman's Choice Loomix. The acquisition will help the company in covering a wider market in the Western United States region for liquid feed supplements, beef and dairy products.

Headquartered in Johnstown, Colorado, USA, Cattleman's Choice Loomix is operating its business since 1952 and is a leading producer of liquid animal feed supplements and ruminants, having production facilities in Johnstown, Colorado, USA; Billings, Montana, USA and Twin, Idaho, USA.

Based in Quincy Illinois, USA, ADM Alliance Nutrition Inc. is a leading producer of livestock feeds and supplement.

Archer Daniels is one of the leading players in the global food processing industry and commands a massive network of more than 560 processing and sourcing facilities and 27,000 vehicles operating across the Americas, Europe and Asia for transportation of agricultural commodities. This provides a strong competitive advantage to the company and strengthens its well-established position in the market.

Moreover, Archer Daniels is in the midst of a brisk expansion strategy, which includes expanding crushing capacities in North America, and fertilizer blending and biodiesel capacities in South America. Moreover, in Europe, the company has acquired processing facilities in Czech Republic and Germany. These initiatives offer a strong upside potential to the company.

However, agricultural commodity-based business is a capital intensive business and hence requires sufficient liquidity and financial flexibility to fund the operating and capital requirements. For this, Archer relies on cash generated from its operations and external financing. Limitations on access to external financing could negatively affect the company's operating results.

Above all, the company faces intense competition from its rivals, Bunge Ltd. (BG) and Corn Products International Inc. (CPO) Furthermore, Archer Daniels also encounters competition from local and regional players in the respective countries. Consequently, this may dent the company's future performance.

Archer Daniels currently has a Zacks #3 Rank, implying a short-term 'Hold' rating on the stock. Besides, the company retains a long-term 'Neutral' recommendation.

 
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