March 3, 2007 / 11:36 PM / 10 years ago

US soyoil, low in trans fat, faces palm oil threat

TAMPA, Fla., March 3 (Reuters) - U.S. production of soybeans designed to produce low-trans-fat cooking oils must increase to keep rising imports of palm oil from filling food companies' demand for healthier oils, according to U.S. soybean industry representatives.

Seed companies have said they expect U.S. plantings of low-linolenic soybeans, which produce a healthier soybean oil, to double or triple in 2007. But palm oil imports also are jumping as food companies work to rid their products of artery-clogging trans fats.

"We want to make sure we have the quantities available to offer those no-trans or low-trans solutions," said Steve Censky, chief executive officer of the American Soybean Association.

"In the absence of doing that, some (food) companies we know have been substituting oils that are high in saturated fats, which isn't a good health trade-off. Our imports of palm oil have been going up," said Censky, on the sidelines of the Commodity Classic grain conference held here this week.

U.S. palm oil imports in 2006 increased nearly 50 percent from the previous year, reaching 625,954 tonnes, and have more than tripled since 2003, U.S. Department of Agriculture statistics show. Most palm oil is produced in Malaysia and Indonesia.

ONE ALTERNATIVE

"Palm oil right now is one alternative we're hearing the most about -- food companies switching to palm. And that's not good for anyone in U.S. agriculture," said Kurt Wickstrom of Monsanto Co. (MON.N), the largest producer of low-linolenic soybean seed.

Monsanto sees plantings of its low-linolenic soybeans at 1.5 million acres (607,000 hectares) this year, up from 500,000 acres (202,000 hectares) in 2006. Its rival, DuPont Co. (DD.N) subsidiary Pioneer, expects seedings of its low-linolenic brands at 400,000 acres (162,000 hectares), from 200,000 acres (81,000 hectares) in 2006.

Overall U.S. soybean plantings are expected to drop this year to 70.5 million acres (28.5 million hectares), from 75.5 million (30.6 million hectares) last year, the USDA said this week.

Farmers grow low-linolenic soybeans under contract for a premium price. Processors who buy the beans raised the premiums for 2007 to around 60 cents a bushel, from 30 to 40 cents in 2006.

Wickstrom said the higher premium reflected a jump in soybean futures prices since last year and good demand from food companies.

Yields of low-linolenic soybeans were variable in 2006, their second year of wide distribution, partly because the low linolenic trait was available in just a limited number of seed varieties. More varieties are available this year.

"A lot of it is the pains of ramping up any new variety and getting the yield and disease-resistant traits into your most elite germplasm," Censky said.

Researchers used conventional breeding to bring out the genetic trait for low-linolenic acid in soybeans about 20 years ago, but there was not much demand for the varieties until recently.

Seed producers took the trait and added it into modern soybean varieties that have been genetically modified to resist herbicides, which are popular among farmers.

Most soybean oil contains 7 to 8 percent linolenic acid, which causes the oil to turn stale unless it is hydrogenated. The hydrogenation process helps the oil last longer but adds trans fats. Low-linolenic soybeans contain 1 to 3 percent linolenic acid, allowing users to skip the hydrogenation process.

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