By John Sandbakken
Global sunflower production is expected to increase by only 1% in 2017-18 at 46.6 million metric tons, according to the latest USDA report. Increased usage in the year ahead will result in a drop in global sunflower seed stocks of 10% by the end of 2017-18. This is the lowest stocks level in the past 15 years.
Over the course of the next few months, depending upon weather conditions this summer and fall, this figure can change dramatically. However, it does offer a potential bullish outlook for sunflower prices.
Sunflower oil trade is forecast to rise, supported by very strong demand in India, the European Union, North Africa and the Middle East. Growing global consumption of sunflower oil will result in global stocks declining 3% to a relatively tight 1.56 MMT.
U.S. sunflower production for 2017 is still undetermined and will not be known until this fall. Given the forecast decrease in planted acres, it is safe to assume that the 2017 crop will be smaller than 2016 when record yields were common in many areas. This resulted in total stocks of oil-type sunflower seed as of March 1 being 40% higher than a year earlier, according to USDA. It represents the highest level of sunflower seed stocks since 2006. This will help cushion the decline in seed production and is expected to allow sunflower products the opportunity to regain market share in domestic markets this marketing year.
USDA expects the oil crush to increase, while ending stocks of oil-type sunflower seed are forecast to decrease based on the higher estimated use.
The strong U.S. dollar is affecting sunflower oil and in-shell confection exports this marketing year. U.S. sunflower oil exports for the first seven months of the 2016-17 marketing year stand at 18,600 metric tons versus 23,700 MT last year at this time. Canada, Japan and Mexico remain the most important sunflower oil importers. Total exports of in-shell confection are down 34% at 27,000 MT compared with 41,000 MT during the same time frame a year ago. Spain and Mexico remain the top importers of in-shell confection sunflower. Exports of sunflower kernel are up 14% from 4,700 MT to 5,400 MT. Demand for U.S. kernel continues to shift from European Union markets to Canada and Mexico.
Old-crop price firm
On the bright side, the dollar has weakened the past few months, and if this trend holds, it should result in an upswing in U.S. exports.
Looking forward, old-crop prices should stay firm ahead of harvest based on industry expectations of a smaller 2017 crop. With the potential for tighter seed stocks, there is a strong likelihood that price premiums will be in place to encourage growers to desiccate and harvest early.
Bird food demand should also start to heat up this month. New-crop price direction will be driven by demand news and eventual 2017 crop production.
USDA is projecting new-crop oil-type sunflower prices in a range of $15.65 to $18.95 per cwt during the 2017-18 marketing year.
To keep up with market news and prices, go to sunflowernsa.com.
Sandbakken is the National Sunflower Association executive director.