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Strong global demand fuels sunflower oil trade

Paula Mohr field of young sunflower plants
RISING DEMAND: Global demand for vegetable oil from sunflowers, shown here in bloom in a field in South Dakota, is rising, according a USDA report. Demand from China, India and the European Union are driving the growth.
Global trade in sunflower oil is increasing due to heavy demand from China, India and the EU.

Global sunflower oil trade is forecast to rise to the second highest mark on record thanks to very strong demand in China, India and the European Union. Worldwide consumption of sunflower oil will top 19.9 million metric tons (MMT), making it the fourth-largest consumed oil.

Global sunflower production is expected to decrease slightly in 2019-20 to 50.95 MMT, according to USDA. Reduced production in Russia, Ukraine and Turkey are primarily responsible for the decline from 2018 levels. This figure can change dramatically over the course of the next few months, depending on weather conditions this summer and fall.

Global sunflower seed stocks at the end of 2019-20 are forecast to decline 20% to about 15% below the 5-year average.

U.S. production

U.S. sunflower production for 2019 is still undetermined and will not be known until this fall. In its first estimate, USDA pegged U.S. sunflower production nearly unchanged in 2019-20 from 2018-19 at 2.12 billion pounds.

Slightly higher oil type planted acreage this year is countered by a return to a lower trend yield.

Confection sunflower production for 2019-20 is projected up on an increase in planted acreage and a modest increase in yield.

March 1 seed stocks for all sunflower seed types dropped from 1.24 billion pounds to 828 million pounds, a 33% decrease from last year. Reduced stocks and a return to trend yields, should lead to minimal ending stocks and a very positive price trend through the 2019-20 marketing year.

U.S. sunflower oil exports are off to a great start and are expected to remain robust for the remainder of this marketing year supporting seed prices at crush plants. U.S. sunflower oil exports for the first seven months of the 2018-19 marketing year stand at 27,100 metric tons (MT) versus 22,000 MT last year at this time. Outstanding sales to be shipped in the remaining months of the marketing year are at 19,100 MT, which compares to 16,900 MT last year at this same time. Canada and Mexico remain the most important sunflower oil importers.

The strong U.S. dollar continues to affect confection sunflower exports. Total exports of in-shell confection are down 20% at 20,626 MT compared with 25,844 MT during the same time frame a year ago. Spain and Mexico remain the top importers of in-shell confection sunflower with both behind last year’s pace. Exports of sunflower kernels are down 39% from 5,235 MT to 3,176 MT. Demand for U.S. kernel continues to shift from EU markets to Canada and Mexico.

Early harvest premiums

The smaller than expected 2018 U.S. sunflower crop should keep old crop prices firm. With 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. Overall new crop price direction will be driven by demand news and eventual 2019 crop production.

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Sandbakken is executive director of the National Sunflower Association.
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