Something troubling just took place in China…

Last month, Chinese officials were caught stockpiling potentially rotten grains into the country’s reserves. 

The situation “holds serious implications for global commodity prices” reported The Financial Times. “If the stockpiles include large amounts of unusable grain, China could be forced to increase imports sharply…”

You see, in China the government guarantees a minimum price on sales of grain. By fudging the paperwork to say they paid full price, officials were filling their warehouses with rotten, discounted grains and pocketing the change. 

China holds nearly 40% of the world’s corn. And if the rumors are true Chinese demand for imported grain could skyrocket. 

This could be a huge catalyst for one company in particular. 

With more than 250 processing plants in over 75 countries, Archer Daniels Midland Co. (NYSE: ADM) is the largest publicly-traded company in a relatively unknown, but vital, portion of the $2 trillion U.S. agribusiness sector: grain trading. 

Essentially, these companies buy, process, transport and sell agricultural commodities like corn, wheat, soybeans and cocoa. They then turn these into food products, vegetable oils, livestock feed, chemicals and biofuels, selling the finished products to the industries that require them. 

Here’s where ADM is uniquely positioned to profit from this potential demand from China. As a grain trader, Archer Daniels makes its money on the total volume of trade. The more grain they move, the more money they make. 

And if China urgently needs to refill its stores, the country will rely on companies like Archer Daniels to deliver it. With 17 corn processing plants in the United States and many more throughout South America and Europe, ADM stands to profit no matter where China chooses to source its new supplies.

Here’s another reason this spike in China’s demand for corn would be a major boon for the company. China has banned all imports of United States corn that uses genetically-modified organisms (GMO).

In fact, more than 545,000 tons of U.S. corn were rejected by the country within a single month after a shipment containing the illegal strain found its way to Chinese shores in November 2013, according to Reuters. 

Still, even that didn’t shut down ADM’s exports to China. 

To meet the demand for livestock feed, the country began importing another crop in place of corn. As a result, U.S. sorghum (milo) exports to China grew 15-fold in 2014 according to The Wall Street Journal. Sorghum is one of ADM’s chief exports from the United States.

Out of desperation, China could — and has already begun — relaxing its standards for GMO corn. This would reopen the world’s second largest grain market to U.S. producers and ADM.

Investors Focusing On The Short-Term Are Missing The Point
StreetAuthority expert David Sterman recommended ADM to readers more than two years ago. At the time, Warren Buffett had just loaded up on six million shares. 

Since then, the bullish factors they both foresaw have come to pass. And as I’ll show you, despite several headwinds the company shows no signs of slowing down.

In 2013, David noted that “the near- and mid-term future for Archer Daniels will hinge on U.S. growing conditions during coming quarters.”

This is why investors should remember that Archer Daniels — being dependent on fickle agricultural commodities — is an extremely cyclical business. 

Knowing this, you can look past the fluctuations of quarterly and annual earnings reports to see the larger trends at play.

3 Ways ADM Is Beating Volatility
Commodity prices do affect ADM’s revenues, of course. Operating profits, for example, fell to $1.87 billion in 2013, nearly $1 billion less than levels seen a few years earlier.  

And even though results have improved in 2014, management is taking steps to reduce earnings volatility in coming years. 

First, ADM is in the middle of a cost-cutting program that will reduce annual operating expenses by $550 million by 2015. 

Second, by diversifying geographically, ADM is insulating itself from local crop volatility. With new stakes in several of Asia’s and Australia’s largest grain storage companies, ADM can take advantage of peak harvest times in both hemispheres.

Third, management is divesting itself of ADM’s most volatile ventures and making big investments in several fast-growing ones.

For example, ADM will close the sales of its global cocoa and chocolate businesses this year for a total of $1.7 billion. The company sold off its South American fertilizer business for $350 million in December.

Also, in late 2014 ADM bought WILD Flavors, a Swiss company that designs natural flavorings for food and drink manufacturers. Together they are projected to generate $2.5 billion in revenues annually. 

ADM also acquired Specialty Commodities, Inc. — which sources and distributes nuts, seeds, fruit and grains — for $170 million.

All these factors contribute to preserving one of ADM’s most stand-out features.

More Than 50 Years Of Dividend Growth… With No End In Sight
As of 2015, Archer Daniels Midland increased its dividend 53 years in a row.

In fiscal 2014, the company bought back 25 million shares of its stock (worth $1.2 billion) and paid out $600 million in dividends. Last year, in total, shareholders received a total of $1.8 billion from the company.

And this year they can expect even more. With management’s strategies in place and a 17% dividend increase last quarter, Archer Daniels expects to return between $2.2 and $2.7 billion to shareholders in 2015. 

Risks To Consider: Because ADM’s top-line profits fluctuate with commodity prices, many investors will see the stock as too risky. And as there is no guarantee that China’s grain stores will force a rapid increase in imports, ADM may have to wait to see the full effects of the country’s growing demand.

Action To Take –> For income investors, Archer Daniels Midland is a great company to buy now and hold forever. As a long-time Dividend Aristocrat, investors can count on the company to reward shareholders. In addition, the company is perfectly positioned to profit from the booming appetite of Asia’s growing middle-class. 

Want to learn more about America’s ‘secret’ world-dominating companies? Whether 113-year-old stalwarts like Archer Daniels Midland or iconic tech leaders like Intel, these are solid companies that you could potentially own forever. They dig wide moats around their businesses, continuously innovate, and then shower shareholders with dividends and buybacks. To learn more about the top 10 “Forever Stocks” we think you should get your hands on immediately, click here.