Market Report: Tate sees sweet side of drought in the US

What farmers in the States would give for the rain we have seen this summer. The country is suffering from its worst drought since the 1950s, which has been ruining crops and pushing up corn prices to record highs.

Yet this hasn't been bad news for everyone. Tate & Lyle may use roughly 2 per cent of the US corn crop, but the food ingredients maker agrees contracts to buy the commodity well in advance, helping it avoid fluctuations in the price. At the same time, the company also sells by-products of its manufacturing process, for such uses as animal feed, at the market rate, which follows corn prices.

As a result, noted Investec's Martin Deboo yesterday, corn reaching $8-a-bushel means there will be "more than usual attention" on Tate's first-quarter results today. Yet although the scribe conceded there "shouldn't be much immediate downside", he did warn it was not all good news as high corn prices would put pressure on the company's ethanol and sweetener margins.

The "sting in the tail", Mr Deboo added, would be if corn is still at $8 when Tate agrees prices for 2013 in December. For example, he calculated, the price of its high-fructose corn syrup food additive, used in fizzy drinks as a sweetener, would jump by around 20 per cent. As a result, he decided to keep his hold rating ahead of the figures, as Tate crept back 3p to 644p.

The latest GDP figures may have made dismal reading for George Osborne, but the FTSE 100 was relatively unmoved as some hopeful voices noted it may increase the impetus for further stimulus measures. Still, by the bell the blue-chip index had edged down 0.91 points to 5,498.32, narrowly stretching its losing streak to a fourth straight day.

After Apple missed Wall Street's forecasts late on Tuesday night with its third-quarter figures, only the second time it has done so since 2003, no-one would have been surprised if Arm Holdings had fallen in response. Yet the chip designer, whose technology is in the iPhone and iPad, had numbers of its own to release, and they came in ahead of expectations, prompting Arm to shoot up 41.7p to 526.5p.

However, fellow Apple supplier Imagination Technologies dropped 3p to 480p as the world's largest company blamed its disappointing results on the economic problems in western Europe and customers deciding to wait until the iPhone 5, expected in the autumn, is released.

Elsewhere, Reed Elsevier shifted up 10.5p to 516.5p on the read-across from the publishing group's Dutch rival Wolters Kluwer, whose latest set of figures came in better than predicted.

Down on the FTSE 250, Drax fell to its lowest for over a year after the government finally announced its proposals for green energy subsidies. Amid fears over the level of support for biomass, the power station operator slumped 76.5p to 442p, prompting HSBC's scribes to raise their rating on the stock to overweight. They argued the market had "misread the announcement", saying the proposals were actually positive. Although Centamin was knocked back sharply in early trading by the news production at its Sukarmi mine had been stopped by another strike, the gold digger, which said the impact was not expected to be substantial, finished just 0.3p weaker at 63.35p.

A gas find off the shore of Equatorial Guinea, the latest in a string of discoveries, pushed Ophir Energy up 13p to 598p. Fellow explorer Tullow Oil was less happy on the Footsie. It was pegged back 86p to 1,284p despite its interim results containing few surprises, with Investec pointing out there was no fresh drilling news.

An inability to provide a forecast is never going to go down well with the Square Mile, as Yell found out to its cost.

The troubled Yellow Pages owner, whose annual meeting today will see investors vote on its name change to hibu, slumped 0.62p to 1.08p on the fledgling index after it also admitted it was looking at a number of measures that could see a "dilution of existing shareholders' interests".

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