September 8, 2006

Increased corn syrup demand from Mexico to tighten US corn supplies

Mexico's opening of its corn syrup market in 2008 would help Archer Daniels Midland (ADM) to increase its sales of high fructose corn syrup to the country, a company executive said.

This increased demand would tighten the supply and demand situation further, ADM's executive vice president for global processing William Camp said, adding that Mexico is already expected to double its imports of the sweetener next year.

If so, Mexico's imports of US high fructose corn syrup (HFCS) would rise to 500,000 tonnes next year.

Mexico and the US ended a decade-long dispute in July this year, opening the way for increased exports of US high fructose corn syrup exports into Mexico.

The agreement, valid from October 2006 to December 2007, allows up to 500,000 tonnes dry basis of HFCS to be imported into Mexico.

Camp said that there is already a relatively tight HFCS supply-demand situation. If the market opens up to free trade in 2008 as expected, supplies would tighten up more. 

On other issues, Camp said he would not be too concerned over corn supply issues from increased demand in ethanol. 

Corn yields have increase from 120 bushels per acre ten years ago to 150 bushels per acre currently, he noted. This gave assurance that the market would respond to an increased need for corn, he said. 

The company also plans to increase spending in a number of its expanding operations, such as its cocoa business.