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Squid or more usually cuttlefish ink, is used for its natural black dye, together with salty but subtle seafood flavours. Most 'squid ink' that's available for culinary use is actually made from cuttlefish ink, which has a more gentle rounded flavour than squid ink, which can be too strong and metallic in nature.
It is essential for making dishes like Arroz negro (black rice) with squid or prawns, risottos, pasta dishes - or as an ingredient in making black pasta itself. It is also used in making squid stuffed in its own ink.