BMO Capital Markets
BMO cut its ratings on the food processor and ethanol producer, as its risk profile has become less favourable, largely reflecting a
deterioration in the health of corn crops. While BMO believes there is limited risk to Corn Products’ 2008 EPS and that its
business model has repeatedly proven it can offset higher corn prices, particularly in South America, the brokerage would expect the recent increase in corn prices to limit Corn Products’ growth in North America and recovery in Asia.
Specifically, they say the company will likely need to purchase corn at significantly higher levels in 2009. BMO also downgraded Archer
Daniels (ADM), noting that while higher corn prices in and of themselves are not always negative for the company (it has the
ability to offset higher corn prices with other business segments), the recent deterioration in conditions in the Midwest, which
likely will adversely affect both corn acreage and yield, likely will not only create higher corn prices, but a supply shortage of corn next year.
