Cargill has kicked off the annual round of negotiations with buyers of its corn-based sweeteners by proposing a price rise of 10% - well below its opening gambit last year.

The US-based agribusiness giant in August 2011, when corn prices were also being raised by weather scares, warned customers of a 30% surge in prices of high fructose corn syrup, or HFCS, a sweetener used largely in fizzy drinks.

Corn processors, which also include Archer Daniels Midland and Tate & Lyle, are believed to have ended up with rise of 10-15% - increases nonetheless more than enough to cover rises input costs as have subsequently arisen.

This year's relatively low request, if one above the rate of broader US inflation, follows a sharp fall in Chicago corn futures from a record high of $8.43 ¾ a bushel reached in August, so curbing somewhat processors' raw material costs.

Meanwhile, prices of sugar are some 25% lower than a year ago, boosting the appeal of alternatives to corn-based sweeteners.

'Processors have whip hand'

Nonetheless, Credit Suisse analysts said that HFCS manufacturers had a strong hand to play in pricing talks, given the dearth of surplus production capacity.

While HFCS consumption is in long-term decline in the US, undermined by a switch by health-conscious consumers from fizzy drinks to fruit juices and water, the likes of Cargill have offset the decline by increasing exports to the growing Mexican market.

"As we have mentioned before capacity ultilisation remains high – 90%+ - giving the whip hand in the negotiations to the sellers," the bank said.

A 10% price rise "should be easily enough to cover input inflation" from higher corn prices, Credit Suisse added, while acknowledging that the final increase customers agreed to was likely to be lower.