After more than a year of intense negotiations, the United States, Canada and Mexico reached an agreement to update the Northern America Free Trade Agreement.

While there were some improvements, the major relief for U.S. producers is that there was no movement backwards with regards to agriculture; all food and agricultural products that have zero tariffs under NAFTA will remain at zero tariffs.

Having the United States-Mexico-Canada-Agreement in place is great news for sunflower products. Sunflower oil, meal, in-shell seed and kernels currently have duty free access in Canada and Mexico.

Canada is the largest export market for U.S. sunflower oil and sunflower kernel. Mexico is the second-largest export market for U.S. sunflower oil, in-shell seed and kernel. Because it was a renegotiation of NAFTA, opening all chapters, USMCA will have to be approved by Congress, and the earliest it would likely be brought up for consideration would be in March. Congressional approval of USMCA would return market certainty to these export markets for producers.

Acre outlook
No estimates are out yet on 2019 sunflower acres, but industry analysts believe that sunflower acres will increase given the interest they are hearing from producers. Depressed prices for wheat, corn and soybeans are driving producers to look for commodities that pencil out, such as sunflowers. Soybean supply is at a record global level.

Wheat and corn are also facing a large global supply and stiff international competition. Export volumes of the big three crops have been disappointing, which has raised a red flag with traders and thus kept a lid on prices.

The bird food market has been somewhat quiet. Warmer-than-normal temperatures with little snow on the U.S. East Coast, the primary market for bird food, has slowed demand. Bird food prices could rally if tougher winter conditions set in.

Crushers in the Northern Plains are offering both 2019 cash and Act of God (AOG) contracts for NuSun and high oleic sunflower. NuSun cash contracts are around $17.00 to $17.15 per cwt., with high oleic in a range of $17.15 to $17.30. AOG contracts are at a 50-cent discount for both oil types. 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. The AOG $16.65 contract increases to $18.30 and the cash $17.30 contract moves up to $19.00.

In the months ahead, price direction will be determined mainly by export demand news and South American oilseed production prospects. The U.S. dollar continues to stay strong against other currencies, which could lead to a slowdown in exports as importers look for cheaper sources of product. Weather in Argentina and Brazil was favorable as of late December. To keep up with price movement and find seed buyers, visit sunflowernsa.com.

Sandbakken is executive director of the National Sunflower Association.