HOUSTON (ICIS news)--The US sweetener market is being rocked by demands of up to 30% price hikes for 2007 supply contracts from corn wet-millers due to the strength of the ethanol market, sources said on Tuesday.
Several corn derivative sweetener segments, such sugar alcohols, were being affected by the pull from ethanol, the sources said.
Sugar alcohol producers said corn wet-millers first approached them with price increases of 10-15% for 2007. But as the supply drain from ethanol became clear, the demands were bumped up to 20-30%, according to ethanol producers and sugar alcohol sources.
Most ethanol production in the US is done through dry milling corn, but grind from the wet milling process is sold to producers of sweeteners such as sugar alcohols.
Ethanol producers said rising corn prices have put upward pressure throughout the corn derivatives chain. Corn prices have risen about $1/bushel from 2005, with front-month corn futures on the Chicago Board of Trade closed at $3.60/bushel on Monday.
Only a limited amount of US ethanol production takes place via the corn wet-milling route. The wet corn-grind is sold into downstream production of sweeteners such as sugar alcohols and into wet distiller grains.
Most US ethanol production takes place as dry milling of the corn, producing a dry distiller grain by-product largely sold as animal feed. Both processes make ethanol and sweetener market starch-milk.
US corn wet-millers include Archer Daniels Midland, Grain Processing, A.E. Staley, and Roquette.
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