NEWS for North Dakotans
Agriculture Communication, North Dakota State
University
7 Morrill Hall, Fargo, ND 58105-5665
February 26, 1998
George Flaskerud, Extension Crops Economist
NDSU Extension Service
Sunflower and canola prices continue to climb as vegetable oil stocks tighten. Prices are being reached that I have specified as objectives in marketing plans for those crops. I would make some sales at these prices and make additional sales on a scale-up basis into May. I would also suggest forward-contracting a considerable amount of anticipated 1998 production during April-June.
Palm oil supplies are expected to be tight during April-September according to Oil World, a respected oilseed outlook publication, because of the drought last year in Southeast Asia. They further indicate that tight supplies in this market will be only partially offset by South American production of soybeans, sunflowers and their products.
In addition, sunseed and sunoil supplies are expected to be especially tight because of lower than expected sunseed production in Argentina, the European Union and Eastern Europe. Rapeseed/canola supplies in Canada and Europe are also tight. As a result, sunflower and canola prices are expected to be at a high premium to soybeans where supplies are more comfortable.
These fundamentals reinforce the seasonal price pattern for sunflowers and canola. Both crops show a strong tendency for price strength into May. Beyond that time, if growing conditions are good in the United States, Canada and Europe, the anticipation of expanded supplies may temper further price strength.
Sharply lower prices can be expected during the 1998-99 marketing year for sunflowers and canola if growing conditions are favorable. The Food and Agriculture Policy Research Institute is projecting a soy oil price of $23.08 versus $24.94 during the current marketing year, a drop of about 8 percent.
This projection indicates the need for price protection on '98 production of sunflowers and canola. A $23.08 soy oil price translates into a sunflower price (40 percent oil) at Enderlin of about $9.70 and a canola price at Velva of about $11.30. Look for forward contracts that offer better prices than those.
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Source: George Flaskerud (701) 231-7377
Editor: Barry Brissman (701) 231-7866