By John Sandbakken
Rain in August in the Dakotas may have added on some pounds to sunflower yields and, in some cases, saved the crop from being worked down.
In 2015 and 2016, the Dakotas experienced record sunflower yields, averaging over 1,800 pounds. It is doubtful we’ll see those yields topped given the severe to exceptional drought conditions this year. However, it does show the resiliency of sunflower to produce a marketable crop in a drought year.
According to USDA, area planted to oil-type sunflower varieties in 2017 decreased 24% from 2016 and totals 1.08 million acres. The reduced planted acreage and expectations for significantly lower yields than the past two years will tighten up the sunflower seed supply quite dramatically in the 2017-18 marketing year.
There is a strong likelihood that price premiums will be in place as crushers and bird food plants compete for available seed. The biggest unknown is the drought impact on production in the Dakotas, the largest sunflower producers. A significant drop-off in yield will impact the market.
Crush plants are expected to be out early offering 2018 new-crop NuSun and high-oleic contracts that have cash and/or act of God production clauses. Crushers will want to regain the acreage lost this year, so new-crop sunflower prices are expected to be very competitive in relation to other crops.
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 temporarily in the near term. In the months ahead, variables that will affect the markets in addition to supply-and-demand factors will likely include strength of the U.S. dollar and uncertainty in demand from China, which could affect several commodities.
The dollar has tumbled to its lowest level in more than a year. The decline in the dollar gives importers more purchasing power and boosts the attractiveness of U.S. products to overseas buyers.
The U.S. and China are at odds over trade issues involving steel and intellectual property. Traders are nervous that China may retaliate against buying U.S. commodities if the U.S. imposes trade sanctions based on perceived unfair trade practices by China.
Bird food price rally
The rally in bird food prices led to a lot of crop being traded in August. Bird food prices were as high as $22 per cwt but have since backed off into a range of $17.50-$18.50 on the increased sales.
A preliminary finding that imports of biodiesel from Indonesia and Argentina were subsidized is helping Chicago Board of Trade soyoil futures. Some analysts estimate that soyoil futures could test 37-39 cents. If realized, this would be positive news for sunflower prices.
Sanbakken is executive director of the National Sunflower Association.