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ADM underlines importance of being wet - in corn milling

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Archer Daniels Midland underlined the difference between wet and dry, in corn crushing terms, by revealing it was buying a wet processing facility in Morocco - days after unveiling a potential sale of its dry mills.

The US agribusiness giant said it had agreed to buy from Tate & Lyle, the London-listed corn processor and sweeteners group, a wet mill in Casablanca, in a move that "represents continued execution of [the group's] plan to grow global capabilities".

The Moroccan plant, which produces glucose and starch from corn, "is a great addition to our global sweeteners and starches footprint", said Chris Cuddy, president of ADM's corn processing business.

It serves "both global and regional customers" in industries such as good, feed and papermaking, he added.

"The facility is the leading sweetener and starch supplier in a country that should see substantial demand growth in the coming years."

Wet vs dry

The acquisition, which will bring ADM its first corn processing plant in Africa, comes a week after the group announced it was investigating "options" for its dry milling assets in its historic US market.


Distillers dried grains with solubles (DDGS)

Wet distillers grains (WDGS)

Modified wet distillers grains (MWDGS)

Source: ADM

Ethanol production has been a far lower margin business of late, particularly in a time of weak oil prices, than the output of more premium commodities such as corn oil.

'Bulk' vs 'specialty'

Tate & Lyle has taken the strategy further still, selling in Morocco what it termed a "bulk ingredient" producer in favour of plants producing specialty ingredients and sweeteners. Array

Condensed fermented corn extractives

Corn germ meal

Corn gluten meal

Corn gluten feed

Corn oil

Source: ADM

Tate & Lyle received, besides the cash, "full ownership of the more speciality-focused plant in Slovakia".

Tate & Lyle shares closed down 1.2% at 580.5p in London on Monday, a weak day for stocks.

In New York, ADM shares fell by 2.3% to $33.30.


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