U.S. agribusiness Archer Daniels Midland Co on Tuesday forecast tighter U.S. ethanol margins in the fourth quarter following a steep drop in oil prices, but said its biofuel business will remain strong in 2015 due to the low cost of corn.

Ethanol prices dropped in tandem with plunging energy prices in recent months as the summer driving season ended and inventories of the corn-based biofuel ballooned, eroding the strongest margins in years to the lowest in seven months.

But margins improved modestly last month as producers curbed output and supplies and demand were now more in balance, Juan Luciano, ADM president and chief operating officer, said during a call with analysts following its quarterly earnings release on Tuesday.

"Ethanol margins were very healthy in Q3 and they dropped significantly as inventories climbed... We expect some of this volatility to continue, but the industry is behaving in a much better way than we saw last year," he said.

ADM, among the country's top ethanol makers, said Tuesday its net third-quarter profit rose 57 percent from a year ago partly due to strong corn processing margins. Earnings in its bioproducts business, which includes ethanol, jumped more than 150 percent to $185 million.

U.S. corn prices are hovering near the lowest level in four years, offering ADM and other U.S. producers of corn-based ethanol a cheap feedstock for the year ahead.

ADM said domestic ethanol demand in 2015 is expected to be around 13.5 billion gallons, similar to this year, while exports could rise as much as 25 percent from an expected 800 million gallons this year.

Lower oil prices have not dented ethanol export demand, but ADM is preparing for the possibility that oil prices remain depressed next year.

"Brent, which is the big driver for our exports, is still at $82 and at $82 ethanol still does very well," Luciano said. "At these oil prices we continue to see exports growing."