Corn syrup makers seeking record prices
Demand has slowed as food companies change to sugar
All four of the major U.S. corn syrup makers are raising prices, letters to customers seen by Reuters show.
The increases are coming despite years of slowing demand and as food companies such as McDonald’s swap the syrup for sugar in their products.
Corn sweetener manufacturers including Archer Daniels Midland and Cargill sent letters to buyers this month seeking to lock in forward prices for 2017, in the annual kickoff to negotiations. ADM and Cargill operate plants in Cedar Rapids that produce corn syrup.
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 and Tate & Lyle. Ingredion operates a plant in southwest Cedar Rapids that produces starch and ethanol from corn.
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 hundred weight (cwt), down from increases of $3.50 to $4.50 per cwt in 2015. The companies, according to the letters, want 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.
HFCS prices have risen since 2014, said corn wet millers and sweetener traders, when Cargill shuttered its corn syrup plant in Memphis, Tenn. 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.
Higher corn syrup prices have prompted some food makers to consider shifting to sugar, especially beet sugar, which is generally cheaper than cane sugar, said a sweetener distributor who sells to food and beverage makers on the West Coast. Food makers also are facing growing consumer demand for clean label products that are free of ingredients such as HFCS, according to industry analysts.
McDonald’s earlier this month said it was replacing corn syrup with sugar in its hamburger buns while makers of other foods ranging from ketchup to breakfast cereal also have removed corn syrup or offered other recipes to consumers concerned about increased risks of obesity.
Second-quarter prices for the type of corn syrup most commonly used in beverages averaged 41 cents per pound on a dry weight basis in the Midwest, up from 35 cents in the year-ago period and from 16 cents in 2000, USDA data showed.