Archer Daniels Midland Co., the world's biggest ethanol producer, said first-quarter profit more than doubled on higher prices for corn-based ethanol and improved soybean-processing earnings. The shares fell after the company said a recent ethanol price decline would cut earnings.

Net income rose to $402.7 million, or 61 cents a share in the three months ended Sept. 30, from $186.3 million, or 29 cents, Decatur, Illinois-based Archer Daniels Midland said today in a statement. Sales rose 9.5 percent to $9.45 billion. Analysts expected per-share profit of 55 cents, based on the average of seven estimates in a Thomson Financial survey.

Chief Executive Officer Patricia Woertz, 53, is boosting ADM's ethanol capacity by almost 50 percent to 1.6 billion gallons by 2008 to take advantage of increased demand for the alternative fuel as gasoline prices rise. Operating profit in corn bioproducts, mostly ethanol production, surged fourfold in the quarter to $177.6 million as demand soared and prices rose.

``ADM reported another quarter of excellent results across the portfolio,'' said Credit Suisse analyst David Nelson, who warned that rising corn prices may shrink ethanol and corn processing margins. ``Corn costs are ADM's biggest medium-term vulnerability,'' said Nelson in a note to clients. He rates the shares ``neutral.''

Shares of Archer Daniels fell after Chief Financial Officer Douglas Schmalz said a 51 percent decline in ethanol prices from a record high in June would shrink profit in the current quarter.

ADM dropped 19 cents, or 0.5 percent, to $38.35 at 11:32 a.m. in New York Stock Exchange composite trading. Before today, the stock had gained 58 percent in the past year, reaching a record $46.71 on May 11.

Archer Daniels ``benefited from the April to September value of our ethanol contracts,'' Schmalz said on a conference call with investors. The recent decline in ethanol pricing will be reflected in the current quarter, he said, with some of the impact being staggered throughout the year as customers renegotiate contracts.

Ethanol prices have plunged 51 percent from a record high of $4.23 a gallon in June as U.S. gasoline inventories increased. Ethanol is blended with gasoline to stretch supplies and make the fuel burn more cleanly.

Corn Profit

Overall operating profit from all corn milling, which includes sweeteners and starches, more than doubled to $290.5 million. Profit from ADM's oilseed processing business, which crushes soybeans into cooking oil and feed, soared 71 percent to $169.6 million.

U.S. refiners and fuel blenders earlier this year switched to ethanol as the primary blending component in gasoline following changes in fuel rules in an energy bill passed by Congress last year. The Energy Policy Act requires refiners to almost double ethanol use to 7.5 billion gallons a year by 2012.

Woertz told an energy conference in St. Louis earlier this month that U.S. ethanol use may eventually reach 14 billion gallons a year. Demand for the fuel was for about 4 billion gallons in 2005, according to the Renewable Fuels Association, a Washington, D.C.-based trade group.

While ethanol futures in Chicago have fallen since the June high, they are still up almost 10 percent from a year ago, trading yesterday at $2.08 a gallon. The company was able to pass on a 10 percent jump in corn prices from the previous quarter, caused mostly by increased ethanol demand. Corn futures soared to a two-year high on Oct. 27 of $3.325 a bushel and are up 66 percent from a year ago.

Soybean Processing

Soybean processing earnings improved as prices for the oilseed fell. Profit from crushing a bushel of soybeans into animal feed, cooking oil and meal rose 27 percent to 71.56 cents a bushel during ADM's first quarter, Bloomberg data shows.

Soybean futures traded in Chicago averaged $5.78 a bushel during ADM's first quarter, down 9.7 percent from a year earlier. The U.S. is the biggest grower of corn and soybeans.

ADM ``will continue to experience the challenges of dealing with volatile commodity prices,'' Woertz said in today's statement.

Schmalz said that the company will benefit from Yum! Brands Inc.'s decision to use low linolenic soybean oil such as ADM's NovaLipid in its Kentucky Fried Chicken business instead of partially hydrogenated vegetable shortening. The shortening contains trans fatty acids that have been linked to heart disease.

`A Real Opportunity'

``It's a real opportunity for our NovaLipid line,'' Schmalz said. ``We've had a very good response from our customers,'' he said.

Operating profit in ADM's Food, Feed and Industrial segment fell 45 percent to $38.1 million as earnings from cocoa, wheat milling and animal health products declined.

ADM defines operating profit for each segment as sales minus operating expenses as well as interest charges related to working capital.

Archer Daniels has about 26,800 employees and operates nearly 240 processing plants worldwide, including facilities in China. ADM's 21 domestic and 17 foreign oilseed plants can crush about 89,000 metric tons a day, or 3.3 million bushels, according to the company's annual report.