CHEMICAL & ENGINEERING
NEWS VOLUME 40, NUMBER
20
The Chemical World This Week
MAY
14,
1962
Output of Safflower Oil Rises Rapidly Move into markets for edible vegetable oils forces diversion of exports and industrial oils to food market Safflower is headed for a record planting west of the middle Great Plains this year. Spurred by increasing demand from cholesterol-minded foodstuffs producers and consumers for the seed's polyunsaturated oil, farmers will plant over 500,000 acres, almost 20% more than last year's 420,000 acres. Predicting the amount of safflower oil this will furnish the industry is impossible; too many factors affect the yield. Chances are, however, that it won't be enough to cause any glut. Oil producers right now are running short of oil from the 1961 crop. The new crop won't start moving in from California and Arizona fields until the end of July. Prices of new crop crude safflower oil already have climbed from 14 cents per pound early in the year to 16 1 / 2 cents. Latest estimates of domestic oil from the 1961 crop peg it at about 75 million pounds. It reached this only after export of seed dropped off sharply, going from 66% of the 1960 crop to 40% of last year's crop. Remains of the 1961 supply are now dribbling out at 19 cents a pound. Estimates, now fairly firm, indicate that edible products will probably end up taking some 45 million pounds. This is not much compared with the volume of the three major edible oils, soybean, cottonseed, and corn. More than 4800 million pounds of these three oils were used in the three major food classifications, spreads, cooking and salad oils, and shortening, according to U.S. Department of Agriculture figures. But compared to less than 2 million pounds of edible uses in 1960, it's a good start for safflower oil.
Aimed at Consumers. Pacing this change is a raft of moves into the con-
sumer market. Several major companies have moved into limited areas with margarine and salad and cooking oils or have put them out for market testing since the middle of last year. And others are considering the field closely. Among recent entrants is Shedd Bartush Foods, which now distributes a safflower oil margarine in Detroit. The company moved into full distribution after only a 13-week market test. In addition to the margarine, sold under the Shedd brand, the company also has a safflower cook-
ing oil. Shedd Bartush says it has moved cautiously into distribution because of the possible shortage of crude safflower oil. Lever Bros, is now test marketing a margarine called Golden Glow in Seattle, Columbus, Syracuse, and parts of Arizona. Hain Pure Food Co., Los Angeles, an early manufacturer of safflower oil products, has been distributing oil, margarine, and mayonnaise through health food stores for many years. A subsidiary, Hollywood Health Foods, now distributes these products nationally.
Safflower Oil Is Aiming at These Markets for Other Edible Oils CONSUMPTION OF OIL, MILLIONS OF POUNDS, 1961
Source: U.S. Department of Agriculture MAY 14, 1962 C & E N
23
Another health food producer, Sona Food Products Co., Los Alamitos, Calif., is now marketing margarine, salad oil, and mayonnaise through jobbers to the grocery trade. General Mills has been test marketing a Betty Crocker brand safflower salad oil in Syracuse, N.Y., and Columbus, Ohio, since last September and is now expanding the test to other areas. Its Saff-O-Life, sold in bulk to food processing markets, has been in production since 1957. Borden is distributing a safflowercontaining margarine in California. Vegetable Oil Products Co., Wilmington, Calif., has been producing edible oil for the institutional trades for almost three years. Since January, it has been selling safflower oil margarine, oil, and shortening under its Golden Sweet label in six western states, Hawaii, and Florida. It also sells in bulk to other manufacturers for sale under other labels. PVO's Efforts. The most extensive effort in safflower oil so far probably is that of Pacific Vegetable Oil, San Francisco. This company is now marketing salad oil, mayonnaise, French dressing, and margarine throughout the West Coast. All these carry the brand name Saffola. Distribution is beginning now in Charleston, S.C., and Boston and should be established along the entire East Coast by midsummer. PVO has been instrumental in the development of safflower as a cash crop in the western U.S. A world trader in copra, tung, and other oils, the company opened up a market for the oil as a high quality drying oil in paints and varnishes in the mid-fifties. It now contracts for about 80% of the seed processed domestically for its oil. Expanding Mill. Late last month, PVO and General Mills announced plans to increase the capacity of the jointly-owned mill at Sidney, Neb., and modernize it because of increases
SAFFLOWER ACREAGE RISING. Mechanical harvester moves through a safflower field near Woodland, Calif. This year, farmers are planting a record 500,000 acres of safflower, 2 0 % above last year's 420.000 acres
in safflower production expected in Nebraska, Colorado, Kansas, and Wyoming this year. Cargill, Inc., Minneapolis, plans to push into the Dakotas, Colorado, and western Kansas for seed to supplement its California sources. Vegetable Oil Products is adding to capacity of a Gilbert, Ariz., mill run by subsidiary Arizona Cottonseed Products Co.
Virtually every large cottonseed miller in California's San Joaquin Valley and in Arizona is contracting now to process seed and sell raw oil, most of them for the first time. Some, like J. G. Bos well of Corcoran, are committing capital to plant expansions and modernization. Most, however, say they plan to contract some tonnage this year, see how future devel-
Growing Food Use Spurs Output of Safflower Oil Sharply Production
Acreage 1958 1959 1960 1961 1962 Sources:
24
145 258 330 360
210,000 270,000 325,000 420,000 500,000
Pacific Vegetable Oil Corp., C&EN estimates
C&EN
MAY
14,
1962
Planting Seed Exports Millions of Pourids of Seed
71 152 218 146
7 9 11 12
Net U.S. Availability
67 97 101 202
Available Edible Oil Uses Millions of Pounds of Oil 22 32 37 75
0.4 1.5 2 45
opments affect price before committing capital specifically for safflower handling. More Growers. One of the biggest problems in expanding any agriculturally-based product is getting the farmer to grow it. This is followed closely by the problem of figuring out how many of them will ultimately plant and then estimating a yield. With safflower, a set of factors seems to exist that will promote increased acreage over the next few years. For one thing, both demand and prices are up. Top quality seed in the field now yields about 38% oil, compared with about 3 3 % a few years ago. Breeders report 40% yields from seeds under development. Safflower is a western crop, primarily because it has to have a dry climate. Too much moisture causes root rot, although work is under way to boost the plant's resistance to this malady. Based on the past year's production, estimates are that 80% of this year's crop should come from California and Arizona, 13% from Nebraska, Colorado, and western Kansas, and 7% from Montana and Wyoming. Oil Yield. Just what it will yield in oil to the domestic market is anybody's guess. Early rainfall in California and Arizona has been good. Midwest farmers, on the other hand, are just finishing planting, and rainfall there has not been sufficient for best sprouting conditions. If demand holds, diversion of more exports than last year to the U.S. market could boost available oil for domestic use. Biggest consumer of export seed has been Japan, where the oil has long been important in food. No importing by the U.S. is foreseen. The only other quantity grower is India, and it consumes its entire output. Small amounts are grown in other countries, but none grows enough now to offer significant amounts for export. Safflower lacks competition for acreage from soybeans, which require more moisture. Add to this controls on the principal crops competing for land—wheat, barley, rice, and cotton— and a pattern forms which should be favorable to supply this year. Moreover, under the soil bank program, as passed by Congress, land diverted from wheat and feed grains can be used to produce safflower (among other crops) and still be eligible, if the Secretary of Agriculture approves, for partial payments under the soil bank. Key Is Cholesterol. At the root of
the demand for edible safflower oil is the public's cholesterol consciousness, and some data indicate that polyunsaturated oils may be effective in reducing blood cholesterol. Initial reports in 1957, plus publicity attending subsequent research, spurred activities in the food industry that sent corn oil use in margarine from a negligible amount that year to almost 90 million pounds last year. This boosted the price of edible grade corn oil to a record 29 cents per pound before an oversupply sent it tumbling in March. Considerable uncertainty still surrounds the exact value of * polyunsaturated fats in the diet. The American Heart Association recommends reduction of fat consumption under medical supervision, with reasonable substitution of polyunsaturated for saturated fats, as a possible means of reducing hardening of the arteries, heart attacks, and strokes. But AHA stresses that more complete information is needed before conclusions can be made as to the effectiveness of dietary changes in reducing heart attacks and strokes. The American Medical Association's council on foods and nutrition has a policy monograph on dietary fats in the works, should release it sometime this summer. Regardless of the uncertainties, the amount of money being bet on polyunsaturates in the market place is high. Safflower producers expect to share in this. Producers claim an average linoleic acid content of above 75% vs. corn oil's 54% and use this freely in advertising. However, because of Food and Drug Administration restrictions plus scientific uncertainties, most have dropped any mention of cholesterol. Producers are convinced they can push the oil by advertising the delicate flavor it carries into margarine and salad oil plus its performance as a cooking oil. This, they believe, will lead to its growing use as a premium product. Producers for industrial markets, particularly paints and varnishes, do not want to see price inflation erode these carefully nurtured markets. Some marginal markets have slipped this year, although producers have attempted to maintain them by absorbing some price increases. Prime producers for this market—PVO, General Mills, and Cargill—are not likely to let it slip further. PVO and General Mills say they will reserve supplies of safflower oil for these outlets.
Canada's Dollar Drops, Sulfur Producers Disagree on Effect Sulfur producers view the Canadian dollar's new, fixed price with mixed interest. Some say it will benefit Canadian sulfur producers and foreign sulfur producers and buyers. Others think that the move will have little, if any, effect on Canadian or domestic sulfur producers. The price of Canada's dollar is now fixed by the Canadian government at 9 2 V 2 cents, U.S. money. This is 21/2 cents lower than the going market rate just before the price was set and about 10% below the late 1960 rate. Some trade sources feel that the new price of the Canadian dollar will put that country's sulfur in a better position to compete with U.S.-produced material. Others say that basic factors in setting the price of sulfur-transportation costs and mining methods—have not changed and that the new dollar value should not affect domestic or foreign producers. Jefferson Lake Sulphur, which produces sulfur in both the U.S. and Canada, foresees some advantages in the fixed price. The company says these advantages will go to buyers in the U.S. and other countries which purchase Canadian sulfur. Jefferson Lake adds that Canadian users buying Canadian sulfur with Canadian dollars will benefit by 7.5% as compared to buying U.S. sulfur with U.S. dollars. Texas Gulf Sulphur, a prime supplier-producer in both Canada and the U.S., views the move as another factor in determining its competitive position. But, in general, the company says, the new price of the Canadian dollar will have no over-all effect on the company's sales policy. Freeport Sulphur, whose sulfur-producing sites are entirely within the U.S., has no comment on the move by the Canadian government. Although Canada's new dollar rate can vary by 1%, up or down, the move by the Canadian government marks the first time Canada's dollar has had a set rate since September 1950. From then until now supply and demand determined the price. According to the Canadian government, the move was prompted by the country's "large deficits in . . . international trade and payments, associated with excessive capital imports and consequent overevaluation of (the) currency." MAY 14, 1 9 6 2 C & E N
25
Legal Price Problems Need Buyer-Seller Understanding Both should cooperate to meet legal responsibilities; RobinsonPatman Act is often confusing With today's legal pitfalls both buyers and sellers must understand the problems involved in pricing chemicals. Sellers need the cooperation of buyers in meeting the legal responsibilities of pricing. They must rely on buyers to keep them informed of competitive conditions, John L. Gillis, Monsanto's vice president of marketing, told the chemical buyers group of the National Association of Purchasing Agents in Chicago last week. Both buyers and sellers must face certain facts together. Sellers today are confronted with overcapacity, vigorous price competition, and falling market prices in many areas. Buyers, too, have their problems. With prices so unstable, they find it tough to follow orderly buying practices and to play fair with their suppliers. In addition, a legal sword, the Robinson-Patman Act, hangs over the heads of both, Mr. Gillis says. The act is often confusing, and in some cases its interpretation has actually interfered with price competition. But businessmen must learn to live with the law. "And we must be vitally concerned with two sections of the act in particular/' Mr. Gillis says. These are 2 ( f ) , which says buyers can't knowingly induce or receive an illegal discrimination in price, and 2 ( b ) , the so-called "meeting competition defense." Section 2(f) hasn't been invoked very often. However, recent cases suggest that the Government may prove the buyer's knowledge of an illegal price just from his trade experience and market information. Thus 2(f) could pose problems for buyers shopping for a lower price, Mr. Gillis adds. Section 2 ( b ) allows sellers to lower prices selectively to meet equally low competitive offers in good faith. Its wording isn't clear and has been widely interpreted in the courts. As a result, Mr. Gillis says, businessmen don't know whether they can: • Meet only competitive offers made to existing customers or match competitive offers to get new business. • Match any promotional allowance offered by a competitor to customers. 26
C&EN
MAY
14,
1962
• Lower prices to keep customers competitive in the face of lower prices granted to their competitors by other suppliers. Each of these problems is now being threshed out in court cases. Another area which demands mutual buyer-seller understanding is "most favored" clauses in purchasing contracts. Some buyers ask for very broad clauses, giving them the lowest price at which the seller is selling comparable material to any customer anywhere—even overseas. Such clauses may even go so far as to prohibit selling at lower prices—even for noncompetitive uses. Such clauses, Mr. Gillis says, stymie sellers without really giving buyers any competitive protection.
IMC to Finish Canadian Potash Mine this Summer International Minerals expects to begin mining potash from its high grade ore deposit near Esterhazy, S ask., sometime this summer. Miners have now sunk the shaft through the 350foot Souris River stratum, with its water pressure of up to 1000 p.s.i. This water-bearing zone was the biggest barrier to reaching the underlying potash. They expect to get through the next 300 feet of rock next month. Below the rock is a 105-foot layer of salt, which is just above an estimated 5 billion tons of potash ore. When miners reach the salt, the processing plant will begin to operate, using salt from the shaft for the brine solution used in potash refining. Tests and final adjustments will be made on process equipment and basic mining and processing techniques for several months. By Sept. 1, the company expects to place the mill in operation. Early next year, the mill should reach the upper limit of its capacity, 1.2 million tons a year. Last summer, IMC decided to increase the mill's planned capacity from 420,000 tons a year to 1.2 million tons (C&EN, Aug. 21, 1961, page 17).
California Testing Three Exhaust Controls Official state testing of three automobile exhaust control devices should begin in California this week. The state's Motor Vehicle Pollution Control Board has approved for testing devices made by Chromalloy Corp.-American
Machine & Foundry, Oxy-Catalyst, and Walker Mfg.-American Cyanamid (C&EN, April 23, page 30). The board plans to have at least a few of each maker's devices on cars in the Los Angeles area this week; 25 devices of each make will have to operate satisfactorily for 12,000 miles before state approval can be given. California law will require installation of a device one year after two or more are approved. The Chromalloy-AMF device is an afterburner. The other two are catalytic types. Universal Oxidation Processes, maker of a fourth catalytic device being considered, has been asked for additional data before acceptance for testing. Approval of its device could put 100 devices on test within the next 60 days. The board estimates that fleet tests will take approximately nine months.
BRIEFS Beryllium Metals & Chemicals Corp.
will acquire technical information, know-how, and patent rights to a beryllium production process developed by Nippon Gaishi Kaisha, Ltd., a major Japanese producer of beryllium. Beryllium Metals, owned by Lithium Corp. of America and Alloyd Electronics Corp., has a beryllium pilot plant at Bessemer City, N.C. Sunray DX Oil Co. is the new name of Sunray Mid-Continent Oil Co. following stockholder approval of the change. The Association of American Soap and Glycerine Producers has changed its name to the Soap and Detergent Association. The association remains at the same address in New York City.
NEW FACILITIES Monsanto's plant for making Lustran styrene-acrylonitrile copolymers and terpolymers of styrene, acrylonitrile, and butadiene is now in full operation at Addyston, Ohio. The plant's capacity is 40 million pounds a year. Vitro Corp. says that its beryllium oxide pilot plant at Salt Lake City, Utah, has started test operations. The pilot plant is expected to provide eco-
Now
Ott Offers
Allied Starts to Make Vinyl Building Panels Allied Chemical's Barrett Division has started to make polyvinyl chloride building panels at its new plant in Edgewater, N.J. The resin, imported from Italy, is extruded as tubing, slit, rolled into flat sheets, and then corrugated. The panels can be used for roofing, siding, patios, carports, and similar applications. Allied's Barrett Division is also starting to operate a new rigid urethane foam plant at Edgewater. The foam can be made in thicknesses up to 11 inches and as roof insulating panels. Allied says it expects the use of urethane foam for insulation to reach 27 million pounds this year, up from 15 million used in 1961.
nomic data on Vitro's process for turning low grade beryllium silicate ores into high grade beryllium oxide (C&EN, Feb. 12, page 30).
Ciba Pharmaceutical plans to dedicate its new $2.7 million developmental research center at Summit, N.J., the latter part of this month. The center contains space for research, process research, development and design, and full-scale manufacture.
Germany. Atlantic will hold the majority interest. The new company's assets will include Jung's manufacturing facilities. It will make a variety of finished waxes from semifinished wax stocks and market them throughout Europe through Jung's former sales organization.
WEEK'S PRICE CHANGES May 7, 1962
INTERNATIONAL
Advances Canadian Industries, Ltd., will act, through its chemicals division, as sales agent throughout Canada for the borohydrides made by Metal Hydrides. The compounds, particularly sodium borohydride, will be stocked in Canada. MHI has not previously had a Canadian sales agent, although its products have been available to Canadian users.
Atlantic
Refining
and
Ernst
Jung,
German manufacturer of wax, will form a new company, Jung, Atlantic Refining G.m.b.H., in Hamburg, West
CURKENT
Linalool, lb. Linalyl acetate, 9 0 - 9 2 % , lb. Zinc nitrate, flake, tech., lb.: t.l. single drums
PREVIOUS
$3.55
$2.85
3.75
2.95
0.16 0.167 2
0.14 0.14 1 /,
Declines Acetophenetidin, imptd., lb. Brucine, oz.: Alkaloid Sulfate Niacinamide, imptd., lb. Nicotinic acid, imptd., lb.
$1.00
$1.10
0.55 0.50
0.74 0.65
4.75
5.00
3.10
3.35 MAY
14,
1962
C&EN
27
