U.S. planted area for sunflower in 2020 expanded by 27% to 1.72 million acres.

Mostly favorable weather in the Northern Plains provided a boost to the 2020 U.S. average sunflower yield to a record 1,790 pounds per acre. Both factors contributed to a strong rebound for estimated sunflower production in 2020 to 2.98 billion pounds from 1.96 billion last year.

The higher output increases the 2020-21 sunflower seed supply by 31% to 3.46 billion pounds, which should support higher demand for sunflower products. Additional stocks are likely to expand the crush by 21%  from 2019 to 2020 to 1.2 billion pounds. Much of the increase in sunflower oil and meal production will be consumed domestically. Output of confection sunflower this season is substantially higher as well. The increased supply will allow for expanded export sales.

Small harvest benefits U.S.

The Argentine sunflower crop is turning out smaller than expected. Severe drought conditions have reduced planted acres and yields.

Most market analysts have lowered their forecasts for Argentine sunflower production to 2.7 million to 2.8 million metric tons. This compares to last year’s production of 3.05 MMT and 3.5 MMT two years ago. The shortfall in Argentine production coupled with lower 2020 production in Russia and Ukraine is giving a price premium to global sunflower seed and oil prices, and should support U.S. prices as well.

The production shortfall is expected to reduce the Argentine sunflower crush in 2021-22 significantly, thereby reducing exports of sunflower oil and meal. This is good news for U.S. sunflower producers as decreased Argentine supplies will lead to more opportunities to export U.S. sunflower products.

Strong prices continue

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 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 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%. For example, a 2% price premium for each 1% of oil above 40% pushes the gross return of a contract with a 45% oil content 10% higher per cwt and would raise the value of a $21 base contract to over $23 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 2021 U.S. oilseed crop prospects will progressively become more critical factors for prices. To keep up with price movement, visit sunflowernsa.com.

Sandbakken is the executive director of the National Sunflower Association. He writes from Mandan, N.D.