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SYDNEY, Dec 20 (Reuters) - Australia's GrainCorp forecast on Thursday a drop of as much as fifth in the grain it receives from farmers next year as it defended its rejection of a sweetened $2.9 billion takeover offer from U.S. suitor Archer Daniels Midland.
Analysts still expect ADM to lift its bid, as it targets the purchase to give it a doorway to supply fast-growing Asia nations seeking food security, but a significant hike is considered unlikely.
GrainCorp executives are also set to face questions from shareholders at their annual meeting on Thursday amid concerns from some that ADM could still walk away from the deal.
The Australian grains handler said in a statement it expected to receive 10-11 million tonnes of grain from farmers in 2013 -- down from 12.2 million tonnes this year and 14.9 million tonnes in 2011.
Still, GrainCorp Chairman Don Taylor said the outlook for 2013 was strong and the company repeated that a revised offer from ADM still "materially undervalues GrainCorp."
"The board's confidence in the outlook is reinforced by the strong and growing tailwinds provided to the company by rising demand for protein and changing dietary habits through the growing middle class in the Asian region," Taylor said in a statement.
"GrainCorp's assets and expertise are ideally and competitively positioned to play a substantial role as the global trade of grain doubles in the coming years," he added.
Grains, food and agricultural businesses in Australia, the world's second-largest wheat exporter and an attractive market due to stable policies and good links to Asia, have been snapped up by large global players in recent years.
GrainCorp operates seven of the eight bulk grain elevators in eastern Australia, handling as much as 60 percent of the region's wheat, barley, canola, chickpea and sorghum crops.
ADM's revised offer of A$12.20 per share in cash, a 3.8 percent improvement on its original $2.8 billion approach in October, was still below the average acquisition multiple for Australian and global agribusinesses based on forward earnings.
Some analysts have said Graincorp may deal at a price above $13 a share, but others think that would over value the Australian bulk grain handler.
This year's bumper crop delivered a record annual net profit, but GrainCorp's earnings are forecast to slide as Australia's grains harvest retreats from record levels due to dry weather in key growing areas.
The company forecast bulk grain exports at 8 to 8.5 million tonnes next year, compared with a record this year of 10.6 million tonnes.
The overall eastern Australia harvest was forecast at 18.2 million tonnes, compared with 18.3 million tonnes this year, it added in a statement.
Some shareholders have been cited in media reports expressing fears that ADM, which has built up a 19.9 percent stake in GrainCorp, could walk away.
Analysts have warned the U.S. agribusiness giant needs to be careful it does not risk its access to short-term funding by damaging its credit ratings with an offer.