Safflower Oil Prices Stable on Good Demand

09 September 2002 00:00  [Source: ICB Americas]

Major safflower oil
producers include:
India, the US, Mexico
Argentina and Australia.
For the past two to three years, steady demand in the food oils market has stabilized the price of safflower oil. Despite competition from olive oil and the increased popularity of canola as a cooking oil, safflower oil is maintaining its niche position as a healthy frying oil. Demand in the cosmetic and pharmaceutical industries has also been stable despite the premium price of safflower oil, says one supplier.

On the West Coast, edible grade, refined safflower oil is currently selling at around 55 cents to 60 cents per pound in bulk, while on the East Coast edible safflower oil in drums is priced at around 78 cents per pound. In 1999 and 2000, by comparison, prices were a few cents lower, due to a global vegetable oil glut. In 1998, prices for edible safflower oil in drums from New York were quoted at around 80 cents per pound.

Prices for high oleic safflower oil continue to be a couple of cents over regular safflower oil, says Mary Ann Siciliano, national sales manager at the Wilton, Conn.-based safflower supplier Arista Industries Inc. "Many consumers are now buying the high oleic types, prodding growers to plant more of them rather than the high linoleic safflowers," she adds. During the past several years, high oleic oils have increased in popularity on claims that they are beneficial in the prevention of heart diseases.

However, safflower oil prices may go up again slightly as prices for commodity oils and grain continue to increase, says Joevic Fabregas, vice president, sales and marketing at California Oils Corp., a major safflower oil producer and exporter. "We will probably pay a higher price for safflower seeds to encourage farmers to grow them for the new crop season. Wheat and corn are currently gaining in price, and, in California, safflowers are competing with wheat and corn acreage as well as [with] some cottonseeds." Nearly all safflower produced in the US is grown and sold under contracts usually negotiated prior to planting, says Mr. Fabregas.

Safflower pricing per ton also varies depending on seed oil content and [or] test weight. "For the current crop we were paying around $250 per ton but if price goes to around $300, we probably could increase production," he adds.

US safflower production last year declined 15 percent to 110,000 tons, as plantings decreased 13 percent to 188,000 acres from 215,000 acres in 2000, according to the US Department of Agriculture. Large stock carryover since the 1999/2000 crop year had been the primary reason for the decreased plantings. US farmers decreased safflower plantings in 2000 by 22 percent from a very high level of 275,000 acres in 1999.

This year, safflower plantings have increased 10 percent to 207,000 acres in response to the lower safflower oil stock level. At the end of July, safflower oil stocks were at 8 million pounds, a 38 percent drop compared to the 21 million pounds of safflower oil stocks at the same period last year, according to the US Census Bureau. Safflower oil stocks at the end of last year plunged 20 percent to 16 million pounds compared to 20 million pounds in 2000.

The new production will ease the slight tightness in the market brought on by the lower stocks, says another supplier. "Between the new crop and the old crops there were some delays, but all in all we really don't have a problem with the supplies," he notes.

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