NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
July 27, 2000
by George Flaskerud, Extension Crops Economist
Following a typical seasonal pattern, the price for oil sunflowers should move higher after harvest into next spring. In general, USDA projections point to higher vegetable oil prices. In the Supply and Demand Report released July 12, a seasonal average soybean oil price of $15 to $18 per hundredweight was projected for the 2000-2001 marketing year, versus $15.70 for the 1999-2000 marketing year. Although higher oil sunflower prices are likely, they are also likely to stay lower than loan value.
The USDA June 30 Planting Report pegs oil sunflower acres at 2.36 million acres, down 14 percent from a year ago. This acreage translates into a reduction of about 10 percent in production if five-year average yields are achieved. Total use must be reduced by a similar amount to maintain stocks at about 5 percent of total use, a frequently observed level.
World sunflower production was projected to decrease by about 7 percent, according to USDA’s Oil Crops Outlook released July 13. On the other hand, world oilseed production was projected to increase about 3.5 percent and world vegetable oil production was projected to increase about 1.4 percent, although ending stocks of vegetable oil were projected to decrease about 6 percent due to strong demand.
Declining sunflower production at both the U.S. and world levels and declining vegetable oil stocks at the world level should lend support to oil sunflower prices. But that support will have only a modest price impact since world oilseed stocks and vegetable oil stocks are still plentiful.
Confection sunflower seed prices must improve over year-ago levels. Acres are down about 36 percent, and production will drop about 30 percent if five-year average yields materialize. This means that total use will have to drop about 25 percent from this past year in order to have a pipeline level of ending stocks. In effect, total use will have to drop to the lowest level in five years.
Storage of oil and non-oil sunflowers should be profitable. As stocks of both types of sunflowers are reduced during the marketing year, prices should increase. The increase should be the most pronounced for non-oil sunflowers.
Loan deficiency payments should peak at harvest. Confection producers should note that non-oil sunflowers will now receive the same loan rate as oil sunflowers, and that there is only one posted county price for all sunflowers. There is a cap of $3 per hundredweight on the loan deficiency payment for confection sunflowers. The Commodity Credit Corporation announced these changes on May 18.
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Source: George Flaskerud (701) 231-7377
Editor: Dean Hulse (701) 231-6136