Australia's GrainCorp defended on Thursday its rejection of a sweetened $2.9 billion takeover offer by Archer Daniels Midland, but said it remained open to higher offers and would hold further talks with its U.S. suitor.

GrainCorp last week rejected ADM's higher offer and repeated at its annual general meeting that the offer materially undervalued Australia's last major independent grains handler.

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.

Speaking on the sidelines of GrainCorp's meeting, Chief Executive Alison Watkins left the door open for another offer.

"The board has had and will continue to have constructive dialogue with ADM," Watkins told Reuters.

"But we will respond to superior proposals that are in the best interest of shareholders."

Other GrainCorp board members also hinted that a higher offer was expected.

"We've had records almost through the businesses, and now we are the prettiest girl in town," Peter Housden, member of the board said at the AGM. "We've had a proposal made to us, which materially undervalues us, at least at this stage."

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.

After recent bumper Australia harvests, GrainCorp said 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.

"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.

"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.

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.

SHARES ABOVE OFFER PRICE

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.

GrainCorp shares were trading above the offer price at $12.34 a share on Thursday, after climbing more than 37 percent from ADM's first offer price in October.

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.

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.