Take Another Look at Sunflowers in 201912/26/2018
Saying the past marketing year for commodities was challenging is probably an understatement. Mother Nature is enough of a challenge each growing season, and no one wants to deal with additional uncertainty that is beyond their control. That was the case in 2018, as large global crop production pressured prices for a third-straight year. The strong U.S. dollar continues to be a drag on exports coupled with the U.S.-China trade war did not give U.S. producers a break in the past year.
From the looks of it, 2019 will again be another challenging year in terms of marketing commodities. Margins will be tighter. Crops that were profitable in the past might not be profitable in 2019. It will be important to watch the markets carefully to take advantage of rallies when selling old crop and locking in new crop prices.
Sunflower prices are following Chicago Board of Trade soyoil futures again after early harvest pressure. Prices had fallen on robust seed deliveries to crush plants from active producer selling in the late summer months plus deliveries of previously contracted seed. Large amounts of seed were traded as producers took advantage of attractive prices and the need to free up storage for other crops. Producer selling will likely slow down given current pricing, unless storage is an issue with the hope of a rally occurring in early 2019.
In its October estimate, USDA pegged 2018 sunflower production at 1.93 billion pounds, down 10% from the revised 2017 production of 2.16 billion pounds. The decline in 2018 production will be accentuated by a much lower level of beginning stocks at 386 million pounds. By comparison, 2017-18 beginning stocks had ballooned to 590 million pounds due to an accumulation from consecutively good crops. For 2018-19, a lower total supply will likely further tighten season ending stocks.
No estimates are out yet on 2019 oil-type sunflower acres, but industry analysts believe that acres will increase given the interest they are hearing from producers. I wish there was a crystal ball to predict this but, as you know, there isn’t. However, based on historical usage, an increase in acres of 20% to 25% in 2019 can easily be added given current demand without impacting present prices to a great degree. Obviously, world events can change markets in a hurry but based on the reduced 2018 oil-type production and the existing demand for the product, the sunflower market should be aggressive in 2019 to get acres to replenish stocks and meet demand.
If you haven’t considered growing sunflower for a few years, take another look and you’ll be surprised how this crop’s genetics have changed. As you prepare your crop budgets for this year, take another look at sunflower. You might be looking at your most profitable crop in 2019. To talk to confection and oil sunflower buyers about contracting opportunities, visit sunflowernsa.com.
Source: John Sandbakken, DakotaFarmer