Nearby sunflower prices have hung in there and bucked the negative trend in wheat, corn and soybean values.

Strong foreign competition and slow demand are impacting commodity prices. Sunflower prices continue to be strong based on tight supplies and consistent demand from all sectors, including the crushers and confection processors. That is not likely to change much over the next several months. In addition, most fundamental news for oil has been positive lately with soybean and palm oil prices on the rise, providing added support for seed prices.

Price weakness in Chicago Board of Trade futures contracts reflect trader expectations that the 2020 South American soybean crop will be record breaking and over time replace U.S. soybeans in the world market. Weather remains good for most of Brazil and Argentina’s main crop areas and will be ideal for developing crops.

Most market analysts have lowered their forecasts for Argentinian sunflower production to 3.2 million metric tons. If realized, this would represent the smallest crop in over three years. The shortfall in Argentinian production is giving some price premium to global sunflower seed and oil prices, and it should support U.S. prices as well.

The production shortfall is expected to reduce the Argentinian sunflower crush in 2020-21 significantly, thereby reducing exports of sunflower oil and meal. This is good news for U.S. sunflower producers, as decreased Argentinian supplies will lead to more opportunities to export U.S. sunflower products and increased market share.

New crop prices remain strong as well 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. They provide an opportunity to lock in attractive prices now for fall delivery and removes 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 NuSun and high oleic sunflower contracts. 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 $19 base contract to almost $21 per cwt.

Consistent demand for seed from crushers, bird food 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, but it seems reasonable to expect acreage near that of last year for most crops. Oil and confection sunflower acres should show an increase. With the release of the report, North American weather conditions and 2020 U.S. oilseed crop prospects will progressively become a more important factor in price.

Sandbakken is executive director of the National Sunflower Association.