The four major U.S. corn syrup makers are raising prices at a time of slowing demand. Corn sweetener manufacturers like Archer Daniels Midland and Cargill sent letters to customers earlier this month that were obtained by Reuters, and seek to lock in prices for 2017. High-fructose corn syrup, or HFCS, is trading at the highest in U.S. Department of Agriculture records dating back to 1994, even as U.S. consumption of carbonated soft drinks, which accounts for two-thirds or more of HFCS usage, sank to a three-decade low. The corn syrup manufacturers, which make up the Corn Refiners Association, are seeking to raise prices by a minimum of $1.50 to $2.50 per hundredweight, down from increases of $3.50 to $4.50 last year. The companies, according to the letters, were seeking to wrap up contracts extending into 2017 by the end of August. Reuters says higher prices have prompted some food makers to consider shifting to sugar, especially beet sugar, which is generally cheaper than cane sugar. Food manufacturers are also facing growing consumer demand for so-called clean label products that are free of ingredients such as HFCS, according to industry analysts.
From the National Association of Farm Broadcasting news service.
From: Reuters
U.S. corn syrup makers seek record prices even as sugar finds more favor
By Michael Hirtzer, journalist for Reuters/Chicago
All four of the major U.S. corn syrup makers are raising prices, letters to customers seen by Reuters show, despite a years of slowing demand and as food companies such as McDonald’s Corp swap the syrup for sugar in their products.
Corn sweetener manufacturers including Archer Daniels Midland Co and Cargill Inc [CARG.UL] sent letters to buyers this month seeking to lock in forward prices for 2017, in the annual kickoff to negotiations.
High-fructose corn syrup, or HFCS, is trading in the U.S. Midwest at the highest in U.S. Department of Agriculture records dating back to 1994, even as U.S. consumption of carbonated soft drinks, which accounts for two-thirds or more of HFCS usage, sank to a three-decade low.
The proposed increases in prices, for the rest of 2016 and 2017, were smaller than last year, according to the letters, also sent to customers by Ingredion Inc and Tate & Lyle Plc.
The four corn syrup manufacturers, which make up the Corn Refiners Association, are seeking to raise prices by a minimum of $1.50 to $2.50 per cwt, down from increases of $3.50 to $4.50 per cwt in 2015. The companies, according to the letters, were seeking to wrap up contracts extending into 2017 by the end of August.
ADM, Cargill and Ingredion declined to comment. Tate & Lyle did not respond to an email requesting comment.
“We want to take this opportunity to express ADM’s appreciation for allowing us to serve your ingredient needs,” ADM said in its customer letter, a copy of which has been reviewed by Reuters.
HFCS prices have risen since 2014, said corn wet millers and sweetener traders, when Cargill shuttered its corn syrup plant in Memphis, Tennessee. The reduced production capacity reduced supply to more closely match demand.
“If they get price increases (on corn syrup), this will probably be record pricing,” a sweetener broker said, requesting anonymity because he was directly involved in customer negotiations.
(Additional reporting by Chris Prentice in New York; Editing by P.J. Huffstutter in Chicago, Richard Chang and Steve Orlofsky)