The sunflower seed oil case.
Aveno’s Quarterly Newsletter
February 17th 2021.
Like many other vegetable oils, the growth in sunflower seed oil production has been quite remarkable. The acreage and yield per ha increased steadily over the years: in 1975 seed production was about 10 million mt and in 2019 it reached nearly 56 million mt.
Growth of sunflower seed oil was not driven by meal demand (protein for meat production) like for soybeans or by fuel demand like rapeseed oil for biodiesel production. Demand from a growing world population, with rising incomes, for higher-quality oils was the main driver.
Growing relative importance.
In some countries sunflower seeds are eaten as snack, roasted or salted. Seeds are used in cookies, on bread and as bird feed, but most seeds are crushed to produce sunflower seed oil. And in recent years we even witnessed stagnant to negative growth in global rapeseed oil production while the production of the (usually) more expensive sunflower seed oil kept growing. Thus, claiming a bigger share of global food use, while groundnut, olive, corn, cotton, coconut, sesame and other oils saw their relative importance decrease over the years.
In the 2019/20 season palm and rapeseed oil production dropped due unfavorable weather and planting decisions. This season the production of sunflowers also suffered a weather-related setback to respectively 50.6 Mmt seed and 18.9 Mmt oil, due to dryness in important production regions, setting the market on fire and making it again a very expensive oil.
Expensive oil.
Historically, sunflower seed oil mostly commanded a premium over other oils. But it happened that to gain market share it had to drop below soy and rape oil, as we saw last year.
But the oil can be expensive for different reasons: more demand than supply is always a very good reason, but the low yield of seed per ha, compared to other oilseeds may be another one. Also, the low specific weight of the seeds (+- 45 kg/hl) has a negative influence on transport costs and so most seeds are crushed in the growing area. For many uses the refined oil needs to be winterized or dewaxed to remove the waxes naturally present in sunflower seed oil. This results in extra refining losses. The seeds contain about 44% oil, 19% crude protein and 17% fiber basis dry matter but the meal is worth less in animal feed formulation than e.g., soybean meal. The shell from the seed is only fiber and, in some plants, it is used as fuel (burned). This means the oil itself has to carry most costs to grow the seed.
Interesting is the disparity in seed yield per hectare and that the biggest producer of seeds and oil, Ukraine, has a small consumption. The biggest oil user is EU-27+UK. Other big sunflower seed oil users are Russia, China, India with each an annual consumption of around 2 Mmt (In above grid India should be included in the “blank box consumption of others”) and Turkey with 1.2 Mmt. In EU-27 Bulgaria, France, Hungary, Romania and Spain grow sunflowers.
If expansion continues it might well be that we see relatively lower prices for sun oil. But his in an uptrend environment for prices of competing oils as global demand grows for food, oleo chemistry and biodiesel production. Meaning that sunflower seed oil prices might be equal to or lower than a (high) soybean oil price.
HOSO extra driver for sun.
In the mid 1950’s and sixties medicinal properties of linoleic acid (C18:2) began to be reported, saying it could help reduce cholesterol levels, which led to a PUFA (poly unsaturated fatty acids) diet boom. Avoiding saturated fats meant partially hydrogenated oils, palm and animal fats had to go. Safflower oil is the richest in polyunsaturated fatty acid (77% linoleic acid) but the health claim boosted the production of mainly classic sunflower seed oil which would partly replace other oils in the food industry.
Research to alter the fatty acid profile of oils through plant breeding was also going on, such as trying to find cheap ways to produce lauric acid (C12:0 typical for coconut oil) for the oleo chemical industry. At the same time others were looking for a plant source of cheap and pure oleic acid (C18:1) for the oleo chemistry and were working with sunflowers. But the economics didn’t work and that new hi-oleic sunflower seed oil was then re-directed to the relatively small infant food market segment. Later, the normal food market came to the rescue. Today HOSO demand comes from industrial fryers and the catering industry. This non- GM stable oil is heat resistant, has a good shelf life and is low in saturated fat but high in mono-unsaturated fat (C18:1).
In the U.S. there is also a variety of mid-oleic sunflower seed oil called “Nusun” which is used by the food industry for deep frying or in formulations needing long shelf life and low saturated fatty acids.
Production statistics make no difference between classic, mid-oleic or high-oleic sunflower seeds but it is safe to say that today not more than 8% of sunflower seed acreage is devoted to hi-oleic. However, in France about 75% of acreage was hi-oleic sunflower, although consumption of classic sun oil in EU-27+UK still amounts to 80% of total sun oil consumption. Russia and Ukraine are increasing their high-oleic seed production as well and this, with the already high prices for classic sun oil, eroded the premium for HOSO over classic. It is unclear how the acreage will be in the future and if farmers will want the trouble of segregating their crop at no extra charge.
All in all, sunflower growers face a sunny future!
Keep shining.
Dr. Aveno