Weather, growing conditions pressure oil prices

By MARK CONLON, Editor
Friday, August 15, 2008 10:20 AM CDT

Good crop condition ratings, for the most, coupled with a fairly positive weather outlook and good growing conditions, have joined to pressure oil prices on the Chicago Board of Trade (CBoT) which, in turn, is impacting sunflower prices.

According to Larry Kleingartner, executive director of the National Sunflower Association, favorable growing conditions and a favorable weather outlook continue to weigh on CBoT prices.

“Downward price movement continues as the market tries to find a floor in near term prices,” Kleingartner said.

NuSun and linoleic sunflower prices were down $1.70 to $2.20 per hundredweight (cwt) from the previous week and stood at $26 for August delivery of old crop and $25.50 for September delivery. New crop prices for NuSun and linoleic sunflower were at $23.70 as the market anticipates a fairly good crop.

Confection sunflower prices remained unchanged to 50 cents per cwt higher at $31.50 to $33. New crop confection sunflower prices remained steady at $37.50 per cwt.

Kleingartner said it didn't appear that USDA's decision to not allow penalty free planting on CRP land this fall has influenced near term prices to a great degree.

“If this decision stands, the competition for 2009 acreage will be intense later this year and in early 2009,” he said.

For now, Kleingartner said many traders believe that most of the risk premium has been taken out of old and new crop prices.

“This is an important price factor as the most weather critical period for crop development - the August-September timeframe - is upon us,” he said. “Any change in the weather pattern could cause a market rally to the upside in a hurry.”

Crop condition ratings declined slightly the first week in August as rain accumulations of 1 to 4 inches fell from late July to Aug. 4 over much of the sunflower production region. Large areas of the region, however, continue to struggle with dry conditions.

“This rainfall was very timely with the majority of the crop in the late vegetative stage to the early bloom stage,” Kleingartner said.

Crop condition declines were recorded in all states with the exception of South Dakota, according to the USDA Weekly Crop Weather Reports.

The national good to excellent rating stood at 53.3 percent as of Aug. 3 compared to 57 percent the week before, according to USDA. This rating is also below last year's rating which was above 60 percent percent.

In North Dakota, 53 percent of the sunflower crop was rated good to excellent with 41 percent and six percent poor to very poor. South Dakota's sunflower crop stood at 72 percent good to excellent and 18 percent fair with 10 percent poor to very poor. Minnesota's sunflower crop was rated 69 percent good to excellent with 25 percent fair and six percent poor.

The USDA report also indicated 36 percent of the North Dakota sunflower crop was blooming compared to 55 percent last year at this time. While in South Dakota 16 percent of the crop was blooming compared to 31 percent last year at this time. In Kansas, 72 percent of the crop was blooming compared to 42 percent last year at this time of year.

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