As ethanol has driven corn prices higher, corn users aren't just sitting still. Heavy HFCS consumers like the beverage industry are re-thinking the ingredient. Which makes stock analysts nervous.
"Why are we worried about pricing power on the part of corn processors?" she asked rhetorically in a report issued to investors Monday. The stock market has focused on the consolidation among corn processors, which has created a small number of corn-sweetener providers, the analyst observed, but sodamakers' ability to push back hasn't received similar attention.
With corn-sweetener prices moving steadily higher, and with some health groups arguing that sugar is a superior sweetener, "we believe that alternatives are more seriously being debated" among beverage-makers, McGlone wrote.
Given the possibility of a switch to alternative sweeteners in the longer term, she said, the consolidated buyer base may flex its buying muscle more than it has in the past, "and margin-enhancing future pricing for corn processors may be harder to come by." [More]
Adding to the shaky but widely advertised link between HFCS and obesity, the jump in prices could swing food manufacturers back to sugar soon. Our dependence on ethanol to use corn jumps another notch.
Food manufacturers seem to be a nervous bunch.