For insight, FoodNavigator-USA spoke with Thom King, CEO of Food icon, which provides a wide range of specialty sweeteners used in packaged foods and beverages, including corn-derived products such as allulose, erythritol and xylitol.
“Collectively, the world can expect about a 20% drop in corn,” predicted king“and that will impact the price of corn-derived glucose and eventually impact the price and stability of erythritol, polyols in general, and anything made with corn, which is most We can expect to see the market change in late Q2 or early Q3.
Icon Foods: “Cheap Erythritol Won’t Last Forever”
Starting with keto fan-favorite erythritol — which has 70% the sweetness of sugar but zero calories — King said sky-high prices in recent years have prompted some Chinese manufacturers making other corn-derived products to switch to erythritol, pushing prices down to three-year lows (although in relative terms they are still quite high thanks to soaring freight costs and tariffs on goods from China).
“But I would look at this ingredient with a keen eye and cover that if you can,” said the king.
“It could suddenly go up 20% later this quarter. We have seen in the past how this can happen in a jiffy. In the future, cheap erythritol will not last forever. The substrate for efficiently making erythritol is glucose, and the most efficient source of glucose is corn.
If China can’t rely on corn from Russia or Ukraine, it will have to go to the United States, where farmers are actually planting less, in part because of soaring fertilizer prices, prompting some to switch from corn to soy, which requires less fertilizer, he says.
Allulose: “This could be a market worth covering”
Moving on to a (rather) new kid on the block sweetener allulose — commercially produced from cornstarch — prices are still high, King said, albeit recent capacity increasesdriven by growing demand put downward pressure on prices. “Prices are down about 18% from last quarter.”
But, he added, “This might be a market worth covering since it is a corn-derived product. Also, the conversion of glucose or starch is not yet very efficient, so prices could get out of range with the price of corn. I would be looking for this beginning of the third quarter of this year.
Xylitol: “An ingredient worth covering right now”
Xylitol – a sugar alcohol with 2.4 calories per gram that is almost as sweet as sugar – is produced commercially from corn cobs and hardwoods.
Lately, prices have actually come down and have now stabilized, King said, but that could change due to the rising price of corn: “The majority of xylitol is derived from corn cobs, not birch as some people have been led to believe, and since it’s a corn-derived ingredient…it would be a worthy ingredient. hedged right now as a price spike is likely in the third quarter. .”
That said, corn prices are just one of many factors affecting xylitol prices, he noted: “We get a lot of questions about why xylitol is so expensive. It’s water. It takes a lot of water to extract d-xylose from corn cobs and corn by-products and there is a heavy tax on water use in China.
Rabobank: ‘At a time when the world needs more corn, the United States will plant less’
The market is now grappling with how much corn Ukraine will plant this spring, with estimates ranging from 30-50% unplanted acreage, according to Rabobank in its latest review of North American agribusiness. There should be more clarity on this by the end of May, when the market will then focus on how much crop can actually be harvested.
“At a time when the world needs more corn, the United States will plant lesssays Rabobank, noting that soybean acreage in the United States now exceeds corn acreage.
“In March’s Forward Planting Report, the USDA said the United States would plant only 89.5 million acres of corn, down 4.4% from 2021.”
If there was a 200 million bushel increase in U.S. corn exports in the 2022/23 crop year, it would likely lead to a 13% increase in the average domestic price received by the grower, said Rabobank, which reported. noted that corn futures were already rising before the Ukrainian conflict. , due to weather concerns, record fertilizer prices, logistical challenges, solid export demand and renewed demand from the ethanol sector.
Volatile Stevia Prices
The price of stevia — which isn’t derived from corn — meanwhile, is all over the place, King said.
“In the first quarter of 2022, we saw a significant increase in the price of stevia. This followed a spike in monk fruit prices. This could very well be artificial, as we have seen a pullback and stabilization over the past month.
“A new harvest will be expected at the end of the third quarter of this year and there is reason to believe that we will see downward pressure on prices or fixed prices in the worst case.”
Monk Fruit: “Prices are stable at the moment, but there will be a buying opportunity in the third quarter”
For monk fruit, he said“There was a significant price jump in the fourth quarter of 2021 and another jump in the first quarter of 2022.”
Since then, however“We saw some slight downward pressure on prices, but more importantly stabilization. Harvest is late Q3 early Q4. prices are stable at the moment but there will be a buying opportunity in the third quarter.”
Inulin: “There is not enough chicory”
As for inulin, a dietary fiber derived from plants including chicory root, Jerusalem artichoke and agave, it is still “very expensive” especially if it comes from chicory root, King said.. “There just isn’t enough chicory and the war in Ukraine won’t help that either.
“The Jerusalem artichoke and agave inulin are certainly stable but expensive. We have moved several of our customers to [shorter chain carbohydrate] FOS [Fructo-oligosaccharides]. While FOS may not have the gelling properties of chicory, Jerusalem artichoke or agave, mainly due to the length of the chain, FOS still holds up well in most processes and is a fantastic prebiotic fiber.
Sunflower lecithin: “Imminent shortage”
Finally – although unrelated to corn – King warned of an impending shortage of sunflower lecithin (which is widely used as an emulsifier in the food industry and is used in Icon Foods chocolate chips) given the scale of sunflower production in Ukraine, which is now threatened by the Russian invasion.
“Luckily, Icon Foods has gotten ahead of this situation and we are very well stocked with chocolate chips. However, we do not know how long we will be well positioned. If you use our chips, I suggest you lock them immediately.