U.S. demand for transfat-free NuSun and high-oleic sunflower oils have experienced impressive growth in the past five years. Usage has increased from 436 million to 655 million pounds, representing a 50% increase in consumption.

USDA expects usage in the 2021-22 marketing year to reach a record 725 million pounds. Based on trendline projections, domestic sunflower oil consumption is expected to grow 5% to 10% annually. A total of 85% of all sunflower oil produced in the U.S. is sold into the domestic market. The remaining 15% is primarily exported to Canada, Mexico and Japan. Canada has been the leading export destination, taking around 60% of all U.S. sunflower oil exports.

Global prices for all major vegetable oils (sunflower, soybean, rapeseed and palm) have roughly doubled over the past 18 months, and gains in palm oil have exceeded those of other oils. In fact, the discounts for palm oil, versus other oils, have nearly evaporated.

Palm oil is traditionally sold at a discount to other major oils and is the oil of choice for many lower-income and bargain buyers. This has led to premium-priced oils like sunflower staying competitive in most markets and could lead to more opportunities for U.S sunflower oil domestically and in export markets.

Active markets

The market for oil-type seeds has been very active since harvest. Old-crop prices have remained near or at marker highs at the crush plants. Bird food buyers were active early on as well, as both markets competed for the tighter seed supplies available this year, versus last year at this time.

New-crop prices remain strong while the battle for acres continues. All sunflower demand sectors are offering Act of God contracts for fall delivery. These “fail safe” contracts have become very popular with farmers throughout the production region. It provides an opportunity to lock in attractive prices now for fall delivery and removes that all important factor of price risk in these volatile times.

Something else to consider is the oil premiums that crush plants pay on NuSun and high-oleic sunflower contracts. Sunflower is the only oilseed that pays premiums for oil content above 40%. For example, premiums at a rate of 2% on each 1% of oil above 40% pushes a contract with 45% oil content gross return 10% higher per cwt and would raise the value of a $27.50 base contract over $30 per cwt.

Consistent demand for seed at crush plants 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 before the report is released.

After the release of the report, North American weather conditions and 2022 U.S. oilseed crop prospects will progressively become a more important factor in price. To keep up with price movement, visit sunflowernsa.com.

Sandbakken is executive director of the National Sunflower Association and writes from Bismarck, N.D.