Tate & Lyle warned over declining US prospects for corn-based sweeteners, and of a "depressed and volatile outlook" for ethanol, as the company mothballed its Fort Dodge processing plant as part of its strategic review.

The UK-based group said that the market for sweeteners such as high fructose corn syrup - which has attracted opposition from high profile figures such as America's First Lady, Michelle Omaba, over alleged health concerns – would continue a "gradual decline".

However, Mexico remained an "attractive market", the group said, after in the year to March offsetting a decline in US sales of the sweeteners, and allowing Tate's food revenues from the Americas to rise by 9.4% to £1.36bn.

"Exports of corn sweeteners to Mexico increased… driven by high sugar prices in the Mexican market, and a relative strengthening of the peso," the group said.

'Modest margin' 

Meanwhile, the group said it saw "little near term improvement" in ethanol markets, which were being depressed by extra capacity aimed at exploiting changes to US regulations.

With the US enjoying "ample supply" of the biofuel, spot ethanol markets last year had provided "at most, a modest cash margin", Tate said, revealing that its own ethanol division ran at a loss.

And the market's weak outlook prompted the group to delay indefinitely the opening of its part-completed Fort Dodge plant, which was commissioned in 2006 to process 150,000 bushels of corn a day, but put on ice a year ago.

"The continuing depressed and volatile outlook for ethanol, and uncertain conditions in industrial starch and corn gluten feed markets, do not provide any basis to complete and commission the plant," Tate said.

Huge writedown 

Finishing the plant would cost a further £70m, after factoring in the tweaks to account for changes in feed and energy markets, and technology improvements Tate deemed necessary following experience of kitting out a plant in Tennessee.

"We have concluded that [Fort Dodge] is highly unlikely to be completed or commissioned in the foreseeable future," Tate said, adding that it would write down the value of the plant to £17m, and swallow a charge of £217m.

"We will continue to seek ways to maximise shareholder value from the plant in these circumstances."

The comments came as Javed Ahmed, the group's new chief executive, unveiled a revamp which will focus the group towards high margin food ingredients and emerging markets.