The USDA’s World Agriculture Supply and Demand Estimates report wasn’t a major mover for oilseed crops such as sunflower, but the numbers for hard red spring wheat did garner some attention.
“USDA’s report was termed a ‘non-event’ for oilseed by most of the trade,” commented John Sandbakken, executive director of the National Sunflower Association (NSA), writing in NSA’s weekly newsletter on April 15.
In the report, Sandbakken noted that USDA left the Argentine soybean crop unchanged at 55 million metric tons while also raising the Brazil soybean crop production to 117 million metric tons “as expected.”
U.S. soybean carryout was also lowered in the report, but by only 5 million bushels.
What traders found more interesting in the report were the numbers for hard red spring wheat, he pointed out.
“USDA cut hard red spring export demand by another 15 million bushels, which helped push ending stocks up to 305 million bushels,” he said. “This level of ending stocks are the largest since 1987-88 with a stocks-to-use ratio of almost 52 percent.
“Without a sizable reduction in production during the 2019 growing season, plus taking into consideration current demand, traders think hard red spring wheat ending stocks will rise even further, putting pressure on new crop prices,” he added.
Following the report, sunflower prices were mixed with nearby NuSun prices down 5 cents to unchanged while high oleic prices were unchanged to up 20 cents at mid-April at the crush plants. New crop was unchanged.
As of April 15, old crop NuSun prices at the Cargill crush plant in Fargo, N.D., were listed at $17.50 per hundredweight for delivery in April, and $17.55 for delivery in May. At the ADM crush plant in Enderlin, N.D., NuSun prices for delivery in April and May were $17.40 per hundredweight.
High oleic sunflower prices at Fargo were $18 for delivery in April and May and at Enderlin high oleic prices were $17.80 for delivery in April and May.
“There is still time to take advantage of the market opportunities that sunflowers can offer as crushing plants are still offering Act of God (AOG) and cash new crop contracts,” Sandbakken said.
At Cargill in Fargo, NuSun new crop prices were $17.25 cash and $17 with an AOG clause. At ADM in Enderlin, new crop prices were listed at $17.05 cash and $16.55 with an AOG.
High oleic 2019 new crop prices at Fargo were posted at $17.25 cash and $17 with an AOG, and at Enderlin high oleic new crop prices were $17.35 cash and $16.85 with an AOG.
While old crop sunflower prices have remained fairly steady, Sandbakken pointed out that producers should also consider the oil premiums that crush plants pay on sunflower.
“Sunflower is the only oilseed that pays premiums for oil content above 40 percent,” he said. “Considering oil premiums are offered at the crush plants on oil content above 40 percent at a rate of 2 percent price premium for each 1 percent of oil above 40 percent, this pushes a contract with 45 percent oil content gross return 10 percent higher per hundredweight,” he explained. “The AOG $17 contract increases to $18.70 and the cash $17.35 contract moves up to $19.10.”
In the near term the market will be keeping an eye on several factors which could influence direction.
“Trading for the next few weeks will mainly revolve around the USDA reports, competition for 2019 acreage, export sales, plus news of any progress in the U.S./China trade talks and the impact it might have on U.S. exports,” he concluded.