Safflower Oil Poised for Growth Despite Slow Sales in Last Decade

24 August 1998 00:00  [Source: ICB Americas]

By Jim Papanikolaw

Although the US safflower oil market has been small and stable with traditional applications in the food industry, it may grow significantly as the product becomes more popular because of its potential health benefits and advantages in cosmetic and pharmaceutical formulations.

Prices for safflower oil have been consistent as ample carryover kept them level prior to the new harvest that became available this month. Prices for refined oil in drums are between 80 and 90 cents per pound, depending on quantity, grade and whether the oil is high linoleic (high in polyunsaturated fats) or high oleic (high in monounsaturated fats). Brokers expect prices to remain stable for the rest of the year.

Safflower oil is generally used for frying or salad dressings. High oleic safflower oil has advantages as a cooking oil, such as heat stability and low saturated fat content. Industrial uses were more prevalent in the past, but the oil has been displaced in those markets by less expensive alternatives. Major producers include India, which does not export, and the US and Mexico.

In recent years, US demand has remained flat or even declined as canola and olive oil became more popular. About eight years ago, roughly one-third of the safflower oil produced in the US was exported to Asia, one-third was exported to Europe and one-third was used domestically.

Today, however, half of US produced safflower oil is exported to Asia, 35 percent goes to Europe and only 15 percent is used domestically, according to John Gyulai, president of Oilseeds International Ltd., a California-based producer, refiner and marketer of safflower oil.

"It's ironic that the US consumer has become more aware of different oils and their health benefits while at the same time overall domestic safflower oil demand has dropped off," Mr. Gyulai says. "Safflower oil has a lot of very good characteristics--in fact more than canola from a general use standpoint, but major companies spent millions promoting canola."

Although the difference in saturated fat content between canola and safflower oil is only about 1 percent, the canola industry has been able to make the claim that canola oil has the lowest saturated fat content. Mr. Gyulai believes that this advertising message has helped the canola industry significantly.

Mr. Gyulai discounts other possible reasons for the decline of safflower oil consumption in the US, such as limited acreage and higher prices relative to other oils.

"I don't think it's purely a price issue," he says. "In the past seven years, US olive oil demand has grown by leaps and bounds while the price remained triple that of safflower oil. Although the safflower plant grows in arid climates, when other grain prices are at very low levels, safflower would be a good alternative to wheat, so I think there would not be a problem in increasing supply if demand warranted it."

Mr. Gyulai believes that safflower oil's advantages may enable it to benefit from the US consumer's desire for functional and healthy oils. Along with the potential opportunities in the edible sector, a demand in the cosmetic and pharmaceutical industries is gaining momentum.

Arista Industries Inc., a Connecticut-based supplier of safflower oil, says its safflower oil sales are into a variety of industries. "There are more food oils being used in cosmetics, and high oleic safflower oil is one of them," says Mary Ann Siciliano, national sales manager at Arista.

Safflower oil's benefits in cosmetics include comparatively reasonable pricing, stability and the ability to form a homo-geneous mixture when used as a carrier for botanicals and fragrances.

Mona Industries Inc., part of the ICI Group, markets Phospholipid EFA, an organic phospholipid complex derived from high linoleic safflower oil, for use in skincare and hair-care products. Although high linoleic acid is not as heat stable as oleic acid, it is a fatty acid that can help maintain healthy skin.

ITC--The US International Trade Commission is preparing for the next round of world trade talks, scheduled to start late next year, by analyzing trade barriers for US exports such as oilseeds, grains, livestock and dairy products.

The investigation will examine recent production and trade trends, barriers or distortions in major countries and markets. It will also focus on methodologies for assessing the effects that changes in various trade rules have on US exports.

MARTEK--A study sponsored by the National Institutes of Health concluded that early dietary intake of preformed docohexanoic acid (DHA) plus arachidonic acid (ARA) is necessary for optimal development of the brain and eye. The study also found that infants fed a formula supplemented with Martek Biosciences Corporation's DHA and ARA, derived from microalgae, had visual development results consistent with breast-fed infants. DHA and ARA are long-chain polyunsaturated fatty acids that facilitate brain and retina development.

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