The impact of poor health perceptions over corn-based sweeteners has prompted cuts of up to 20% in prices, and left producers facing "some pretty aggressive scrambling for contracts", Credit Suisse has warned.
The alert came as the investment bank cut its rating on shares in UK sweeteners group Tate & Lyle from "outperform" to "neutral", prompting a 6% slump in the stock. Shares in US rival Corn Products International closed 4.5% lower in New York.
While corn processors had been expecting flat prices for high fructose corn syrup heading into 2010 - and some analysts had high hopes for the sweetener given rocketing cane sugar prices - the late-year dash for deals had undermined prices.
"The latest we have heard is down 3-4 cents a pound (15-20% down)," Credit Suisse said, forecasting an overall drop of 15% in 2010.
The shortage of contracts follows claims, which the corn processing industry vigorously denies, that corn syrup is a bigger threat to health than cane sugar.
Soft drinks groups, the product's core consumers, are "preferring to switch to sugar given the poor health image of high fructose corn syrup," the Credit Suisse report said.
Snapple, Ocean Spray and Capri Sun had switched some months ago, with Gatorade in November saying it would replace corn syrup with sugar.
Given that corn syrup was selling for about half the price of spot sugar, "these are decisions are made despite the financial hit".
Tate & Lyle, which produces sweeteners from corn as well as its historic sugar business, would suffer a hit of up to $80m from the weaker HFCS market, the report said, cutting forecasts for both 2009-10 and 2010-11 results.
Credit Suisse cut its rating on Tate shares to "neutral" from "outperform", reversing an upgrade made in October over optimism about the group's new chief executive, Javed Ahmed.
And it urged "caution" ahead of Tate's trading update, due on January 28, also flagging statements from Corn Products on January 26 and Archer Daniels Midland on February 2.
Tate & Lyle shares closed 28.8p lower at 418.7p in London.
In New York, Corn Products shares ended $1.37 lower at $29.29, with Archer Daniels stock easing 1.1% to $31.23.