OUTLOOK '13: Sorbitol prices to rise 8% in 2013

07 January 2013 18:10  [Source: ICIS news]

HOUSTON (ICIS)--US sorbitol prices are expected to increase about 8% in 2013 as higher feedstock corn prices and increased demand from the food sector push market prices higher.

Annual sorbitol contracts, typically settled by buyers and sellers in the US during the November-December period, are forecast to increase about 8% for liquid material, while lesser-used crystal sorbitol prices are expected to increase by about 4%, industry sources said.

Liquid sorbitol prices are forecast to rise to a range of 40-44 cents/lb ($882-970/tonne, €670-737/tonne) in 2013, up from a range of 37-41 cents/lb in 2012.

The bulk of the 3-cent/lb liquid sorbitol price increase (about 2 cents/lb) is attributed by industry sources to the higher costs of feedstock corn compared with corn prices a year ago.

Sorbitol is commercially produced by the hydrogenation of glucose from the starch fraction of the corn kernel.

The remaining 1 cent/lb of the increase is attributed to higher overall costs of food ingredients in general and sugar-replacing sweeteners in particular.

Crystal sorbitol, used mainly in pharmaceutical and other specialized applications, is forecast to increase about 4% from a range of 93-103 cents/lb in 2012 to 96.75-107.00 in 2013.

Sorbitol volumes are forecast to increase about 2% in 2013 from the prior year as sorbitol use traditionally increases or decreases on par with annual changes in the US gross domestic product.

Market sources are projecting that the US economy will continue to experience modest growth in the range 1.5-2.5% in 2013.

Futures prices of feedstock corn topped $8/bushel late last summer as a severe drought rampaged across the US midwest, reducing the national average corn yield to about 122 bushels/acre from pre-plant projections of about 155 bushels/acre.

In mid-December, corn futures at the Chicago Mercantile Exchange were trading in the range of $7.00-7.20/bushel.

In 2013, early projections from agricultural analysts indicate that US farmers will plant somewhere between 95m-98m acres of corn.

With global demand for corn and other crops continuing to grow because of bourgeoning populations and improved diets in developing countries, corn prices in 2013 are expected to remain well above farmer costs of production.

US producers of sorbitol are Archer Daniels Midland, Corn Products International and Roquette America.

($1 = €0.76)

By: Frank Zaworski
+1 713 525 2653

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