Final sunflower oil exports for the 2017-18 marketing year are in, and oil exports were up. From October 2017 to September 2018, 40,384 metric tons (MT) of sunflower oil was exported. That’s compared to 32,460 MT during the same time period in 2016-17. That’s about a 25% increase.
Canada remains the top importer of U.S. sunflower oil, importing 20,282 MT of sunflower oil during 2017-18. That’s up from Canada’s 17,869 MT during 2016-17.
Sunflower oil exports to Mexico tripled from 4,874 MT in 2016-17 to 12,572 MT during 2017-18. 2018-19 oil export sales to Canada and Mexico are ahead of last year at this same time, with just over 25,000 MT already on the books for delivery this marketing year. The robust export sales and small 2018 crop are supporting nearby sunflower prices at the crush plants.
New crop prices higher
New crop NuSun and high oleic sunflower prices are at a premium to old crop as the industry tries to secure 2019 production after 2018’s small crop. The potential of tight ending seed stocks by the end of September has confection processors and oil crushers offering attractive 2019 new crop contracts.
Crop budgets for 2019 are still showing both confectionary and oil sunflowers among the top-earners. In addition, all 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 provide an opportunity to lock in attractive prices now for fall delivery, and AOG contracts remove that all-important factor of “price risk” in these very volatile times.
Something else to consider is the oil premiums that crush plants pay on sunflower. Sunflower is the only oilseed that pays premiums for oil content above 40%.
Considering oil premiums that are offered at the crush plants on oil content above 40% at a rate of 2% price premium for each 1% of oil above 40%; this pushes a contract with 45% oil content gross return 10% higher per cwt and would raise the value of a $18.00 base contract to $19.80 per cwt.
Consistent demand likely
Consistent demand for seed from crushers, birdfood and confection processors is expected in the final months of this marketing year. Argentine sunflower production is expected to be around 3.5 million MT.
If realized, this would reduce the Argentine sunflower crush in 2019-20 significantly, thereby reducing exports of sunflower oil and meal. The shortfall in Argentine production, coupled with anticipated lower soybean and rapeseed oil production this year, is opening market opportunities for global sunflower seed and oil and should support U.S. prices as well.
Trade expectations about planted acreage will likely be in a wide range, but it seems reasonable to expect corn and spring wheat acreage to increase and soybean to show a decrease over 2018 levels. Oil and confection sunflower acres should show an increase.
Once planted acres are known, North American weather conditions and 2019 U.S. oilseed crop prospects will progressively become a more key factor in price.
Sandbakken is executive director of the National Sunflower Association