ADM Eyes Brazilian and "Distressed" Assets

ADM, as speculated here last week is looking at now very cheap US ethanol assets for possible purchase

Archer Daniels Midland Co. (NYSE:ADM) announced plans Tuesday to enter the Brazilian ethanol market in a JV with Grupo Cabrera. Increasing biofuel and protein demand has driven earnings over the past two years, and it has been seeking ways to enter Brazil's sugarcane-based ethanol market after entering the bio-diesel market in 2007. It will invest $370 million over seven years, with partner Grupo Cabrera adding $130 million.

Pat Woertz, ADM's chairman and CEO, said the joint venture aimed to produce 70 million to 90 million gallons of ethanol a year, with the company exploring other opportunities in Brazil. ADM also leveraged its position as the world's largest grain processor by revenue to more than double fiscal first-quarter earnings, blowing past expectations and pushing its shares up 20% to $25.34 in recent trading.

The economics of corn-based ethanol in the U.S. have deteriorated in recent months as companies struggled with the mix of high corn costs and weak ethanol prices. Construction of new plants has ended following a three-year construction boom, and several operators - including VeraSun Energy Inc. (NYSE:VSE) - have sought bankruptcy protection.
Woertz said ADM would complete its existing ethanol plants in the U.S. and remained interested in "distressed assets." The comments sparked a sharp rise in shares of Pacific Ethanol Inc. (NASDAQ:PEIX).

With 1.5 BGPY of US production already in its pipeline, ADM has both the balance sheet and the will to become the single most dominant ethanol producer on the globe. 

I think 2009 looks to be an exciting year for shareholders...