26 / www.FarmProgress.com – April 2016
Dakota Farmer
Crops
Sunflowers still among top earners
CROP budgets are still
showing both confectionary and oil sunflowers
among the top earners in
2016. New-crop sunflower
prices are very competitive with other crops,
and processors are still
offering 2016 new-crop contracts. Processors want to build on the momentum
the large 2015 crop allowed to rebuild
product demand and expand market opportunities.
All of the sunflower demand sectors
are offering act of God (AOG) contracts
for fall delivery. These fail-safe contracts
have become very popular with farmers
throughout the production region. They
provides an opportunity to “lock in” attractive prices now for fall delivery and
remove that all-important factor of price
risk in these very volatile times.
Most fundamental news for oilseeds
Key Points
BY JOHN SANDBAKKEN
■ Projected budgets show
sunflowers are among top earners.
■ Processors look to build supplies
and expand market share.
■ However, most fundamental
oilseed news has been negative.
has been negative lately. Traders continue
to talk about U.S. soybean export sales
lagging, record-high South American soybean production and large world carryout
stocks. Adding more pressure is the U.S.
dollar continuing to trade higher against
a basket of currencies. 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.
Meal values are expected see further
reductions as the South American crop
hits the world market in earnest this
spring into summer. This should result
in oil values gaining on meal and making
up more of the crush margin. This scenario, coupled with tighter oil stocks than
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a year ago and El Niño-related concerns
for palm oil production this year, looks
promising for high-oil-content seeds such
as sunflower.
Overall, good demand should support
seed prices, allowing sunflower to hang
in there and buck the negative trend in
oilseeds.
Taking a look at the global picture, sunflower production in 2015-16 is forecast
lower to 39.5 million metric tons (MMT).
Crop reductions for Argentina and South
Africa were the main reason. Drought is
expected to limit 2015-16 sunflower area in
South Africa to a four-year low. Argentine
sunflower-planted acres are lower than
what was initially expected in the beginning of the season as market conditions
discouraged producers from dedicating
a greater amount of area for sunflower
production. As a result, USDA’s forecast of
sunflower production declined by 250,000
tons to 2.35 MMT. The 2016 Argentine sunflower crop will be 400,000 tons smaller
than last year’s crop. The shortfall in pro-
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duction is giving some price premium to
global sunflower seed and oil prices.
Consistent demand for seed from
crushers, bird food and confection processors is expected in the final months of this
marketing year. The main market mover
from April onward will be USDA’s March
Prospective Plantings report.
Trade expectations about planted
acreage will likely be in a wide range,
but it seems reasonable to expect wheat
acreage to decrease and corn and soybean
to show an increase over 2015 levels. Oil
sunflower acres should show an increase.
Expect confection sunflower acres to be
unchanged. With the release of the report,
North American weather conditions and
2016 U.S. oilseed crop prospects will
progressively become a more important
factor in price.
To keep up with price movement, you
can go to the NSA website at sunflowernsa.
com.
Sandbakken is executive director of the
National Sunflower Association.
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