The fall in corn values has cut Cargill's already-slim prospects of pushing through a 30% hike in prices of corn-based sweeteners based, Credit Suisse said – saying it might be possible to justify no price rise at all.
Cargill in August warned corn syrup users, such as packaged food companies and soft drinks makers, that poor US weather, demand from developing countries and "dangerously low" US feed grain stocks had "created conditions never before seen in our corn wet milling business".
"The persistent increase in demand... along with significant increases in raw materials, will be reflective of a minimum 30% price increase for calendar year 2012," the agribusiness giant said.
Cargill made the comments in a letter ahead of the annual pricing round for corn-based sweeteners, such as high fructose corn syrup, with Cargill warning of delays to setting values thanks to "uncertainty" surrounding the US corn crop.
However, Credit Suisse analysts said that talk of steep price increases was part of the ritual of the annual pricing talks.
"Every year the sellers of high fructose corn syrup set their sights high for pricing, it is a part of the gaming tactics employed by the industry. The reality is usually lower," the bank said.
And the fall in corn prices, which resumed on Friday, sending prices back to about $6 a bushel, had also weakened the hand of Cargill and peers such as Tate & Lyle.
"When the letter went out corn stood at $7.35 per bushel."
Indeed, while sellers would then have needed a rise of about 10-12% to cover corn costs, "recasting the number today we don't think any rise is necessary", given the grain's correction since and the resilient price performance – so far – of processing byproducts which Tate & Lyle highlighted last week.
Mexico vs US
Nonetheless, the bank forecast talks running "satisfactorily" for sellers, with continued firm demand from Mexico playing in their favour.
Extra Mexican purchases of high fructose corn syrup this year should "broadly offset" falling US volumes, which are amidst a trend of annual declines of 2-4%.
The comments came as Credit Suisse lifted to 675p, from 625p, its target price for Tate & Lyle shares, on which it kept a "neutral" rating.
The shares closed on Friday at 634p.