COEUR D’ALENE, IDAHO — As was the case in 2015, the corn sweetener pricing negotiation period for next year is off to an historically early start with one refiner notifying customers in an Aug. 1 letter that called for price increases of $1.50 to $2.50 a cwt above 2016 contracted levels.
As indicated in its Aug. 12 letter on “general market conditions,” Cargill followed with another letter Aug. 1 to currently contracted customers with its 2017 corn sweetener pricing program. Regular corn syrup, liquid dextrose and 55% high-fructose corn syrup were priced at a minimum $2.50 a cwt above 2016 contracted levels, and 42% HFCS was priced at a minimum $1.50 a cwt above 2016 levels, with prices valid through the close of business Aug. 19. The letter said 2017 volume would be limited to 2016 levels for existing customers.
There were no indications that other corn refiners had yet issued pricing guidance for 2017, but as has been the case in recent years, most refiners tend to fall in line with the initial pricing letter.
One trader suggested buyers may be likely to take the $2.50 a cwt increase for regular corn syrup and 55% HFCS “if they want product,” as supplies of both products have been tight the past couple of years with demand exceeding production capacity last year and mostly in line with capacity this year. But he said buyers may balk at the increase for 42% HFCS, and there are those buyers who will hold out on all products seeking flat prices from other refiners.
Refiners recent focus on meeting existing customers’ needs and reduced production capacity the past couple of years have limited buyers’ success at “shopping around” for better deals.
Last year, refiners mostly got increases of $4.50 a cwt on regular corn syrup and 55% HFCS, $3.50 a cwt on 42% HFCS and about $2 a cwt on dextrose.