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The new agricultural product that DuPont (NYSE: DD ) plans to launch next has nothing to do with corns or pests. In fact, chances are some of you may not have even heard about it. But, it is something that's bound to draw your attention, especially if you a health freak.
When asked about the company's new product line up at the RBC Capital Markets Global Industrials Conference held some days back, Jim Borel, the executive vice president at DuPont's agricultural and nutrition business, named Plenish -- the high-oleic soybeans -- as the first product getting readied for the markets in the near term.
Wait. Soybeans are OK. But what's oleic?
Oleic seeds are usually used to make oils. Oil made from oleic soybeans is free of trans-fat and low on saturated fat, but contains high amounts of healthy monounsaturated fat. Simply put, that means lower bad cholesterol and healthier hearts for all. More importantly, oleic oil's higher heat stability and better shelf life makes it a good choice for deep frying in restaurants and packaged food industries.
With all that goodness, oleic soybean oil is sure to grab attention once it is available in the markets. That day may just be around the corner.
In the game
DuPont's subsidiary, Pioneer has already won approval
from major markets across the globe to import Plenish. Once the European Union gives its nod, which DuPont feels won't take too long, Plenish will be good to go. Likewise, Monsanto's (NYSE: MON ) Vistive Gold high-oleic soybeans are in their pre-launch phase, and look set for a commercial roll out next year.
"So what is the size of the opportunity?", you ask. Well, it certainly looks big.
Famers are ready for oleic...
Both companies have already found support in farmer groups and food companies. In June this year, the United Soybean Board or USB, constituting a group of soybean farmers who have come together to fund research and development initiatives, joined hands with DuPont and Monsanto to popularize oleic soybeans among farmers across the U.S.
USB has an ambitious goal – to see oleic soybeans cover 80% of the total acres planted in the U.S. by 2020. Now that sounds like a huge opportunity for DuPont and Monsanto. Better yet, the USB plans to spend $60 million in the next five years to market oleic soybeans. This support should certainly help the products of the companies reach far and wide.
...and so are food companies
According to the USB, the food industry consumes nearly 70% of the soy oil that the U.S. produces every year. The USB plans to meet representatives of several food companies to educate them about oleic soybeans. Meanwhile, the U.S. Soybean Export Council, popularly known as USSEC, is diligently sending delegations to, and conducting training workshops in, key soy export markets such as Japan and Mexico. The USSEC has just concluded a three-day conference and trade show at Ohio. With soy buyers from as many as 40 countries likely to have visited, chances are that the USSEC may have used the platform to promote oleic soybeans.
Food processing companies, Archer Daniels Midland (NYSE: ADM ) and Bunge (NYSE: BG ) have already put their weights behind Plenish. Bunge is working with farmers in Delphos, Ohio to incentivize them to grow Plenish, which will then be delivered to Bunge's plants for processing. Likewise, Archer is contracting and offering incentives to soybean farmers in Frankfort, Indiana to grow Plenish soybeans.
There is no news yet of Monsanto contracting with any food company for Vistive Gold, but you will likely hear something soon.
The ride ahead
While oleic soybeans look like a high-potential product, there's a catch. DuPont and Monsanto can't really depend much on ADM or Bunge, because ironically, the food companies also act as competitors. Both has its own oleic soybean oil – ADM has one under its Novalipid brand and Bunge's product is called Pour'n Fry NT Ultra. Moreover, oleic soybean oil will have to take on the already established oleic canola and oleic sunflower oils.
In fact, ADM and Bunge have played key roles in popularizing high-oleic canola oil such as the Nexera brand produced by Dow Chemical's (NYSE: DOW ) Dow AgroSciences division. Oleic canola has reportedly been a huge success – Dow projects its share in the total U.S. canola consumption to hit 40% in the near term. Furthermore, Dow forecasts a 30% growth in the production of omega9 canola oil (which primarily contains oleic fatty acids) for 2013. Reports about the acceptance of oleic sunflower oil have also been upbeat. Dow, as well as Syngenta currently produces oleic sunflower oil.
That said, since soybean oil is one of the most widely consumed cooking oils in the U.S., oleic soybean oil could well be a runaway hit and mean big money for DuPont and Monsanto. Investors should keep a tab because the commercial launch of Plenish and Vistive Gold is probably just some months away.
And while you wait for the oil to hit the supermarkets near you, you may want to check out these lip-smacking recipes, courtesy DuPont Plenish. Looks like the oil's worth a wait.
An opportunity that's bigger than oleic oil
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