Expectations of a switch from corn-based sweeteners to sugar may have been overplayed, Credit Suisse said, after groups such as Cargill and Tate & Lyle won above-inflation price increases for corn-based products.

Many commentators, such as Czarnikow, and groups such as Canada's Rogers Sugar have flagged the potential for food and beverage groups to substitute corn-based sweeteners, such as high fructose corn syrup, or HFCS, for sugar  given relative futures prices.

New York raw sugar futures on Wednesday came 0.2 cents a pound from their two-year low, while Chicago corn prices, while 14% below last year's record highs, remain at historically-elevated levels.

But on Credit Suisse calculations, HFCS remains significantly cheaper, at about 25 cents a pound on a sugar-equivalent basis, compared with refined sugar at 31 cents a pound.

Price gap

"In fact, the [price] difference between sugar and HFCS is still relatively significant," the bank said, adding that there were other reasons too to expect corn-based sweeteners to retain popularity.

"There is little prospect of a major cola company switching – the sugar isn't available."

The result is that US demand for HFCS "looks to have held up pretty well", slowing its rate of decline to some 0.5% last year, with shipments to Mexico making up for lost American orders.

Indeed, some companies, including Capri Sun and the makers of Hunt's tomato ketchup, which switched from corn-based sweeteners to sugar citing consumer concerns "have switched back to the cheaper HFCS when their sales failed to benefit".

'Whip hand with producers'

The market dynamics had ensured that in the annual round of negotiation between producers and buyers over HCFS prices, "the whip hand remained firmly with the sellers", Credit Suisse said.

Corn sweetener producers had achieved "high-single-digit" increases in prices, well above broader US inflation, if "just about right to cover off the higher corn cost".

The likes of Cargill are initially believed to have asked for rises reported at 10-20%, but according to the bank values "fell away slightly towards the end of the negotiations".

Indeed, some other commentators have attributed greater clout to buyers, such as Coca-Cola and PepsiCo, in the negotiations, saying that sugar prices in Mexico have fallen below those of some corn-based alternatives.

Czarnikow has forecast in Mexico "some demand switching back to sugar from HFCS", fostering a 400,000-tonne rise to 4.7m tonnes in domestic sugar consumption in 2012-13.