Sunflower seed stocks will be tighter in the 2019-20 market year and there is a strong likelihood that price premiums will be in place as crushers and birdfood plants compete for available seed. Crush plants are expected to be out early, offering 2020 new crop NuSun and high oleic contracts that have cash and or Act of God (AOG) production clauses. Crushers will want to maintain the momentum in acreage gained this year so new crop sunflower prices are expected to be competitive in relation to other crops.
Oil World is anticipating world vegetable oil prices to see only limited downward potential at current levels. This is good news for high oil crops such as sunflower. The 2019-20 world vegetable oils stocks are expected to decline by 1.4 million metric tons (MMT) while consumption is expected to increase by 5.6 MMT. This will create a large production shortfall in meeting global demand and should open up significant buying interest to the benefit sunflower oil to fulfill oil purchases. The reduced global oil supply should lead to oil providing a larger share of the crush value thus further supporting seed prices at the crush plants.
In the months ahead, other variables that will affect the markets in addition to supply and demand factors will likely include uncertainty in demand from China and strength of the U.S. dollar. The ongoing trade fight with China will continue to be the main concern in the market unless cooler heads prevail, and an agreement is reached to end the trade war.
The tit for tat trade dispute is affecting a number of commodities. The U.S. dollar remains strong versus other currencies and expectations are that it will stay that way through 2020. The downside of a stronger U.S. dollar is that it could lead to a slowdown in exports as importers look for cheaper sources of product.
In preparation for harvest, producers are cleaning out storage bins and deliveries to crush plants have been on the increase. This along with new crop deliveries could pressure prices in the near term. To keep up with price movement you can go to sunflowernsa.com.
Source: John Sandbakken, Dakota Farmer
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