A year ago, several factors combined to keep pressure on sunflower prices. That’s not the case this year as those factors have changed a great deal.
Writing in the June 10 National Sunflower Association weekly newsletter, NSA executive director John Sandbakken noted that, in general, sunflower prices remain stable after some heavy producer selling led to price pressure at the crush plants earlier this spring.
“Last year at this same time, ample supplies, strong deliveries by producers and a large old crop inventory kept the pipeline full at the crush plants, keeping a lid on prices,” Sandbakken explained. “That’s not the case this year, as a smaller 2018 crop coupled with smaller beginning stocks has the industry using up stocks to meet demand.”
He noted that old crop prices were unchanged to up 10 cents during the first week of June and nearby prices had gained 10-50 cents depending on location since late May.
As of June 10, old crop NuSun prices at the Cargill crush plant in Fargo, N.D., were listed at $17.50 per hundredweight for delivery in June and $17.25 for delivery in July. At the ADM crush plant in Enderlin, N.D., NuSun prices for delivery in June and July were $17.10 per hundredweight.
New crop NuSun prices at Fargo were $16.55 cash and $16.05 with an Act of God (AOG) clause. At Enderlin new crop prices were $16.40 cash and $15.90 with an AOG clause.
High oleic sunflower prices for June delivery at Fargo were $17.65 and $17.55 for delivery in July. At Enderlin, high oleic prices were $17.50 for delivery in June and July.
High oleic new crop prices for 2019 at Cargill were $16.65 cash and $16.15 with an AOG. At ADM new crop high oleic cash prices were $16.60 and AOG contracts were $16.10. At other locations in North Dakota new crop high oleic cash prices were $15.80 at Pingree and $15.10 at Hebron.
Sandbakken also noted that the latest trade aid payment package remains on the mind of traders.
“In order to qualify for the program payments producers must plant their acres with a qualifying crop,” he explained. “This requirement and the sluggish planting pace this spring in the Midwest has traders wondering how many acres will be switched from corn to soybean this year. This has created additional volatility on the Chicago Board of Trade for soybean, meal and oil contracts since the program was announced.
“The market is also focusing on trade and exports, which have been bearish,” he continued, adding that USDA was to release its next crop production report June 11.
Expectations were that USDA would project a slight decline in 2019 soybean production potential, given the cool, wet spring and planting delays. On the flip side, USDA is expected to increase 2019-20 ending stocks slightly, moving from May estimates of 970 million bushels up to 990 million bushels.
Drier and warmer than normal weather conditions were forecast for the Dakotas and that was expected to allow for good planting progress in the middle of June.
Sandbakken pointed out that sunflower is included in the plan for 2019 Market Facilitation Program (MFP) payments recently announced by USDA. He explained that payment will be based on a single county rate for all covered commodities multiplied by a farm’s total plantings to all crops in aggregate in 2019.
“The per acre payments are not dependent on the crops that are planted in 2019 to not influence planting decisions,” he said. “Each county will be assigned an MFP payment rate based on historical production. USDA did not release information on payment rates when announcing the program.
“All growers in a county will receive the same rate, regardless of the eligible crop grown. Payments will be based on reported planted acres for 2019 which cannot exceed 2018 plantings,” he added.
Again, Sandbakken continued to urge producers to consider that 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. A $16.60 contract would be $18.25 and $18 AOG contract reaches $19.80.