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High-Oleic Sun Oil

Tuesday, January 4, 2011
filed under: Utilization/Trade

The high-oleic sunflower market has matured and evolved over the last few years, making it poised to take advantage of excellent opportunities in both the food and industrial sectors.

The patent on high-oleic sunflower expired several years ago, opening the floodgate of numerous companies contracting production with growers and marketing the oil to a vast range of buyers. There are about seven companies contracting acres from Canada to Texas. These grower contracts usually include specific delivery locations and delivery time frames. The product is strictly identity preserved (IP) through the marketing system, from the grower bin to the end user. Grower contracts are at a premium to NuSun® and the oil is marketed at a premium to NuSun and most other oils at the end user. Extensive work has been done at the breeding level to ensure yield and oil levels are on par with NuSun, further motivating farmers to grow high-oleics.

The demand for IP products is growing with more end buyers specifying particular needs, be it beef, tomatoes or vegetable oil. End users are looking for a product with a healthy image profile. “More and more food companies are catering to a group of consumers who consistently read labels and are willing to spend more for what they believe is a healthier product,” says one food market observer.

Given this change in food marketing and consumer demand, it is not surprising that there is an increasing demand for high-oleic sunflower oil. All of the companies contracting high-oleic acres are seeking to increase their acreage this year based on expected demand. The biggest challenge is getting sufficient acres in this present environment of intense acreage competition.

With no trans-fats and low saturated-fats, sunflower oil shines above all other alternative choices in oils when it comes to nutritional values. Bolstered by the FDA campaign to ban trans-fats beginning in 2006 and societal trends toward eating healthy foods, sunflower oil made significant inroads in the food industry. The fact that sunflower is a non-GMO crop is a key in most upscale markets. “Our customers want to know the origin of the oil and that it was processed in a certain way. It’s about knowing that it came from a clean source so there are no GMO worries,” states one oil marketer.

Vegetable oil is the base ingredient for many food products. Food companies are looking for very clean food labels. For a potato chip company, they want a “clean” label that reads: potatoes, sunflower oil and salt. “You can’t have partially hydrogenated oil or a bunch of ingredients no one can pronounce on your label and be able to sell the product to an upscale consumer,” notes a food consultant.

High-oleic sunflower oil is on a level all its own when it comes to vegetable oil choices. Qualities like performance, neutral taste, nutritional value, low saturates, non-GMO properties, and price were all cited by large-scale marketers as driving the demand for high-oleic sunflower oil. The oil simply provides the whole package that certain market segments are demanding.

Performance is the first key. Food companies must have a product that performs in the fryer with stability on the store shelf. NuSun and a number of other oils will provide this, but high-oleic sunflower can enhance shelf-life stability in certain food applications. This “niche market” for high performing oils is growing, and high-oleic sunflower would be an excellent fit in these markets if production can be increased.

There is also an increasing market for high-stability oils in the industrial side. Industrial manufacturers have a very strong interest in eliminating harsh chemicals from the majority of their products, from resins to insulation. One major reason for this shift to naturally produced ingredients is the potential of litigation due to health-related injury to workers from long exposure to a caustic chemical in a manufacturing setting. Vegetable oils or a derivative are often the product of choice for substitution.

The oil can also be used on the industrial side for production equipment. One sunflower oil marketer says they have begun using food-grade hydraulic oil in their processing plant. “That way if we experience a leak or some sort of breach, the oil used to run our processing equipment does not introduce properties into the oil being produced that traditional petroleum-based oil would.”

Oil well “fracking” may also provide an opportunity for high-stability oils. Fracking is a technique used to create fractures that extend from an oil well bore into rock and coal formations, allowing the trapped oil to flow out. There is a great deal of public and private pressure on oil companies to use environmentally friendly ingredients for this purpose. Naturally stable oils like high-oleic sunflower oil may find new market opportunities in this push for increased global environmental responsibility. Sunflower is quite unique among oils since oleic levels of over 85% can be guaranteed.

So the opportunities for high-oleic sunflower oil appear to be very good in the food and industrial sectors. Ensuring adequate production is a real challenge in a year like 2011 when the major crops like soybean and corn are leading the price parade. In the past, minor crop prices have always been at a premium to the majors, so 2011 is indeed a unique year. Some users of high-oleic sunflower are shuddering from price sticker shock and are looking for alternatives. One snack food producer and user of 25-30 million pounds annually of expeller press high oleic reports they are in real danger of being forced out of the market by low supplies and high prices, based on the projected 2011 sunflower acreage.

But food companies carving a niche in the broad U.S. food sector that require non-GMO, natural, low saturates, stability, great performance and a super image crop are going to have to help attract farmers to plant the crop. End users like the one mentioned above will have to “get in the game” early to guarantee supplies to meet their needs. Farmers have numerous crops to select from, all with good profit potential in 2011. The National Sunflower Association is working aggressively to increase yield and disease tolerance toward making sunflower competitive with other premium crops. An IP crop requires more management, including storage and marketing, and in a year like this that might be a tougher sell to growers.

The good news is that high-oleic sunflower hybrids are on a performance par with other sunflower hybrids. That is not the case with other IP oilseed crops, where yield is well below the top varieties. — Sonia Mullally
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