2019 Sunflower Market Outlook

UPDATE

USDA Harvest Report – October 11, 2018

The first production forecast for 2018 is 1.93 billion pounds, down 10 percent from the revised 2017 production of 2.16 billion pounds. Area planted, at 1.30 million acres, is down 11 percent from the June estimate and down 7 percent from last year. Sunflower growers expect to harvest 1.24 million acres, down 12 percent from June and down 7 percent from the 2017 acreage. The October yield forecast, at 1,560 pounds per acre, is 56 pounds lower than last year’s yield but will be the fourth highest on record, if realized.

As of October 1, lower yields are expected in 6 of the 8 published States compared with last year, with increases only expected in California and Kansas. Compared with last year, average yields forecast in North and South Dakota are down 45 pounds per acre and 100 pounds per acre, respectively. The forecasted production in South Dakota, the leading sunflower-producing State this year, is 895 million pounds, down 13 percent from 2017. In North Dakota, production is forecast at 674 million pounds. ~ John Sandbakken | Executive Director – NSA

Early signals indicated a good year for 2019 sunflower markets.

The United States Department of Agriculture’s June 29 acreage report indicates the area planted to sunflower in 2018 is 1.46 million acres, up four percent from 2017, and harvested area is expected to increase four percent to 1.41 million acres from the previous year, says John Sandbakken, the National Sunflower Association’s executive director.

Planted acreage of oil-type varieties is up eight percent at 1.31 million acres, and harvested area is also expected to increase eight percent to 1.27 million acres, from last year.

There is some carryover in stocks this year, says Sandbakken, however, the increase in planted acres is minimal, creating an advantageous position for sunflower in the marketplace. “Oils were only up eight percent in the U.S., that’s not a lot given the demand. I think it shapes up 2019 to be a very attractive year for sunflower because we’re going to come in with minimal stocks, and we’re going to need acres – we just don’t have that carryover to count on,” says Sandbakken. “It’s going to make processors aggressive.”

Mark Jackson, Nuseed’s general manager for North America, also foresees opportunities for oilseed producers and predicts even higher acres for oil-type varieties. “It’s wonderful to see oil sunflower acres bounce back this year,” he says. “I think acres are going to be a little higher than USDA’s estimate of eight percent growth.” At time of interview Jackson also anticipates a decent production year for sunflowers. “We have a long way to go before the season is over, but from what I’ve seen so far, we’re off to a great start.”

According to Jackson, certain circumstances are helping boost acreage of oil-type varieties. “There are many factors helping push acres up – from late snowfalls and a lingering winter in the Dakotas, to dwindling stocks and low commodity prices. Sunflowers are set to provide growers with some of the best returns of the year,” he says.

Planted acreage of non-oil varieties is down 21 percent from 2017 at 147,000 acres. Harvested area is also expected to decrease 21 percent to 136,700 acres. In addition to large stocks, a strong U.S. dollar continues to affect confection exports, says Sandbakken.

“The confection industry has traditionally exported about 50 percent of the product we produce in the United States. With the strong dollar, it has made it difficult in some markets to continue a strong export pace because our product is more expensive right now,” he says.

Increasing competition from Chinese and European processors plus changing export trends are also constraining non-oil sunflower markets, says Jackson. “Compounding the issue is the shift in export market demand for larger confection grain, which is limiting the opportunities our traditional in-shell confections have in the global market,” he adds.

However, new varieties in the pipeline will help meet the demand for larger confection seeds. “To help relieve some of the competitive pressure, Nuseed is working with U.S. processors to commercialize two new products specifically designed for the export market. We are excited about the opportunity to help our U.S. processors and growers gain back some market share they’ve lost,” says Jackson.

And diminishing stocks and decreased acres mean confection producers are still well placed for 2019.

“If we have demand the rest of this market year and into next year, given the decrease in acres, it’s going to be the same situation as oil sunflower. The inventory will be low and they’re going to have to refill that,” says Sandbakken. “Both segments of the industry – oils and confections – are going to be set up to rally well in 2019.”

The key to oilseed prices going forward, says Sandbakken, is demand and weather. For example, long-term tariffs imposed on U.S. soybeans entering China will affect oilseed prices.

“If the tariffs are in place for any amount of time, it’s going to put a real drag on soybean prices,” says Sandbakken.

Furthermore, the United States exports about one-third of its soybeans to China, and if these tariffs are in place and the products don’t move, the industry must find a home for them. “That will put pressure on markets, especially the soybean market, and that sometimes spills over onto the other oilseed markets. Until we get a little further down the road that’s hard to know,” says Sandbakken.

Environmental factors are more likely to play a role on sunflower prices. “We are tied to the soybean oil contract to some extent. However, it’s going to have an indirect effect. What’s going to play more into sunflower prices is the growing season we’re going to have this year, given the number of acres we have,” he says.

To really change the dynamics of the North American sunflower crop, and create sustainable growth, Jackson suggests there is more opportunity to grow demand in the health-conscious consumer market.

“Sunflower oil has natural health benefits including low saturated fats and high heart healthy monounsaturated fats, combined with great natural stability for cooking. Sunflower oil is an easy, non-GM alternative to traditional commodity oils,” says Jackson.

“For sustainable growth, it’s essential that sunflower takes a greater share of America’s dinner table,” he says.

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