Tate & Lyle on track despite higher corn costs

30th Sep 2010 07:01

Sugar and sweetener firm Tate & Lyle said today that it expects its encouraging start to the year to continue in spite of higher corn costs. In the speciality food ingredients division, growth in speciality sweeteners and starches has remained steady, while sucralose volumes have been robust, though at lower selling prices, the company said.Corn sweetener volumes benefited from the continuation of firm demand for high fructose corn syrup (HFCS), a sweetener used in foods such as cereal and in fizzy drinks, in Mexico and good demand over summer in the US and Europe, T&L said.'The encouraging start to the year has continued in the second quarter, particularly within Speciality Food Ingredients, with good operational performance and solid demand in a number of our markets,' said chief executive Javed Ahmed. 'This underpins our confidence that we will make progress in the full financial year.'T&L said that, while corn prices have been risen in the US and Europe, it was able to offset this in the US by lifting prices for its own products, while itself benefiting from hedging. In Europe, however, hedging options are more limited and higher corn prices are expected to have a 'modest' impact on profitability during the final quarter of 2010.Corn prices have been soaring recently, in line with soft commodity markets generally, fuelled by strong demand from the animal feed and the biofuel industries.Industrial starch volumes in both the Americas and Europe were ahead of last year, although margins continued to be weak, the company said. It added that ethanol margins improved slightly in the second quarter, although the market remained under pressure.Tate & Lyle is today completing the sale of its EU sugar refining operations for £211, which will help to reduce debt.