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Sunflowers blooming in a field Mike Powles/Getty Images
BIG POTENTIAL: A blooming sunflower stands out in a field. Sunflowers may be a good addition to growers’ crop rotations this year.

Forecast looks bright for sunflowers in 2020

Higher new crop prices than last year and Act of God contracts make sunflowers a better bet this year.

From the chatter I am hearing from both producers and processers that are contracting acres, I would say that sunflower acres will increase this year.

The common theme I hear is that oil and confection sunflowers offer a good alternative to be put into the crop rotation in 2020. Based on smaller 2019 production, tight seed stocks and product demand, nearby sunflower prices continued to increase throughout the winter despite the negative trend in wheat, corn and soybean values.

Adding further interest in sunflowers are attractive new crop prices, which are higher than a year ago at this same time. Crushing plants are still offering new crop cash and Act of God production contacts. AOG clauses basically mean the producer doesn’t have a production risk. Should drought, hail, insects, disease, etc., result in a yield loss and the producer doesn’t have enough production per acre to cover their sale, the AOG clause kicks in. You are only obligated to deliver what you produced, not what you contracted.

Keep in mind oils also receive a 2% price premium for each 1% of oil content that is over 40%. At current new crop prices, that can add significantly to the final price when delivered.

How much can acres increase before it impacts prices in 2020? Based on historical usage, an increase in acres of 20% to 25% in 2020 can easily be added given current demand without impacting present prices to a great degree. Several new domestic customers have come onboard adding sunflower oil to their product mix. Export markets are growing as well, giving several market options to sell oil.

Obviously world events can change markets in a hurry, but the sunflower market should be able to handle a modest increase in 2020 acres to replenish stocks and meet demand.

Shift to high oleic

Something else that you will see in 2020 is the continued push toward converting the oil crop from NuSun to high oleic sunflower. There is a good market for both oils at this time. However, trends change, and products need to adapt to consumer preferences. The market wants oils to have zero trans-fat and saturated fat levels at or below 7%.

In addition, food processors want oils to be very stable for extended shelf life and fry life coupled with a neutral taste profile. High oleic sunflower oil fits the bill on all counts. While NuSun was a positive move for the sunflower industry in the late 1990s, the increasing market demand for high oleic oils has convinced oil crushers that the industry needs to adjust again.

COVID-19 impact

In the months ahead, traders will continue to weigh the coronavirus impact on the U.S. and world economies.

Another price setting fundamental that the markets will be focusing on will be South American corn and soybean production and impact it might have on U.S. exports. Growing season weather from North America to the Black Sea region will become a more important price factor as well.

Sandbakken is executive director of the National Sunflower Association.

TAGS: sunflowers
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