Nice weather coupled with price premiums convinced some sunflower producers to begin harvest much earlier than usual to take advantage of the situation. However, with better than expected yields, that’s putting a little pressure on prices.
“Many producers are out harvesting earlier than normal with good yields, according to early reports,” said John Sandbakken, executive director of the National Sunflower Association. “This has led to some harvest pressure affecting seed prices as deliveries are heavier than normal.”
September prices were at a 55 cent per hundredweight premium to October so producers began desiccating the crop earlier than normal to take advantage of the price spread.
At the level of investment to desiccate, the action more than paid for itself in increased yields as producers tried to avoid loss to blackbirds or damage caused by high winds.
Local prices for October delivery of NuSun sunflowers was $26.30 per hundredweight, down about 50 cents from the September price.
USDA released its latest sunflower seed stocks report on Sept. 28 and, as expected, stocks were down 25 percent from a year ago for oil and non-oil sunflowers.
“Carryover sunflower seed stocks are extremely low and at the lower end of historical ending stocks numbers,” Sandbakken said. “Crushers and confection processors will be eager to receive new crop deliveries as soon as possible to fill the pipeline to meet market demand.”
The first sunflower yield estimate from USDA is expected in in early October. Persistent warm and dry weather conditions have pushed progress of the crop to where it’s about two weeks ahead of average. Despite some concern of effects of continued dryness and crop stress, sunflowers have held on nicely.
Another factor impacting the sunflower market is that the palm oil market is searching for a bottom and is taking the soybean oil along for the ride, according to Sandbakken.
“This has led to sunflower giving back some of the recent price gains,” he said. “Oil values are expected to remain weak in the near term until a bottom is found in palm oil.”
Although the weather had been conducive for harvest activity the past few weeks, this was expected to change as a cold front bringing colder temperatures and moisture was predicted for midweek.
USDA released its latest supply and demand estimate in late September which pegged global sunflower production for 2012/13 at 1.65 million tons lower last month to 35 million tons. This was due in part to long periods of hot, dry weather in Ukraine, Russia, Kazakhstan, and Eastern Europe which substantially impaired sunflower pollination this year.
“USDA projects that in the year ahead, soybean oil prices will gradually gain support with a steep decline in oil stocks due to a reduction in crush. This is positive news for sunflower as sun oil values are closely tied to soyoil values,” Sandbakken explained. “Reduced sunflower production in Russia, Ukraine along with Eastern Europe coupled with a rise in soyoil values should be positive news for sunflower prices going into the next marketing year.”