The high-fructose corn syrup (HFCS) industry, a market that consistently used a half-billion bushels of corn each year, has seen a pull-back just as corn farmers are looking for more demand to reduce carryover stocks and boost prices.
USDA projects U.S. HFCS makers will buy 13% less (71 million bushels) this market year than at its peak in 2001.
For Bob Bowman, an Iowa corn farmer, it's a reminder that maintaining a long-established market can be just as important as creating a new market. Bowman, who sells to ADM's fructose plant in Clinton, sees local prices fall whenever the facility pulls back on corn purchases.
“With harvest starting so late this year and new-crop corn just about nonexistent, they were bidding 27¢ above Chicago to get supplies,” Bowman says. “It was worth kicking into gear early to get that price, even though my corn was still at 30% moisture. The following week, they were bidding 8¢below Chicago.”
Chad Hart, a grain market specialist at Iowa State University, sees the same dynamic on a larger scale. “You used to see an estimate of 4¢ change from a 100-million-bushel change in stocks,” says Hart. “But compare USDA's numbers from July to October this year, and you'll see a 120-million-bushel increase in corn carryover and about a 40¢ drop in average farm gate price.”
The corn market has become more sensitive to changes in ending stocks than it used to be, according to Hart, and the market's swings affect every grower. “We need all that disappearance to support prices.”
So how important is HFCS for today's prices? Domestic usage is equivalent to almost 13 100-million-gallon ethanol plants, making it the No. 4 corn market (after livestock, ethanol and exports). Within the export category, corn shipments to foreign HFCS producers can total almost 100 million bushels.
WITH THAT MUCH demand at stake, growers have good reason to stay on top of HFCS developments, according to Bowman, who warns that the sweetener has been under attack in recent years.
“There's all kinds of misinformation being peddled about nutrition, dieting and safety. Last spring, the Iowa Corn Growers Association even had to weigh in with Pizza Hut over some ads that implied HFCS wasn't a natural ingredient,” he says, noting that the company was quick to correct the problem.
The attacks have prompted the Corn Refiners Association (CRA), which represents HFCS makers, to mount an unprecedented consumer campaign via national print and broadcast advertising and rapid response efforts. A related Web site, Sweet Surprise, provides answers to common questions and extensive scientific information on HFCS and the false claims made about it.
The campaign has made significant progress, according to Audrae Erickson, CRA president, who says consumers often change their views when they get the science on HFCS. She warns, however, that mischaracterizations continue and says CRA will continue its efforts to restore the ingredient's reputation.
Erickson urges growers who want to maintain the HFCS market to weigh in whenever they hear it misrepresented, and Bowman offers similar advice: “Whether you hear this from friends or see something in the news, don't let these claims go unanswered. We all have to stand up for this corn market. Every voice is important, and sometimes your voice is the one needed to make a difference.”