Premium markets | Oil prices down while confection prices are up
Oil sunflower prices are depressed but the price premium for confection sunflower has never been better, according to processors.
“We have an oversupply of oil sunflower in the world right now,” said Bruce Wiebe, general manager of flax, sunflower and birdseed for Legumex Walker Inc.
There were 125,000 tonnes of oil sunflower stored in all positions in the United States as of Sept. 1, according to the U.S. Department of Agriculture, which is up 174 percent from the same time last year.
“That is definitely going to affect the market. There is no question about it,” said Wiebe.
By contrast, there were 29,000 tonnes of confectionary sunflower inventory, down 30 percent from last year.
The U.S. stocks situation helps explain why the price for oil sunflower is 20 cents per pound compared to 32 cents for confectionary sunflower.
Agriculture Canada is forecasting 23,000 tonnes of carryover from last year’s Canadian crop, but Wiebe isn’t buying that number.
“There is virtually no carryover of sunflower in Canada,” he said.
A wet spring caused Dakota growers to shift acreage from confectionary to oil sunflower, which is less risky to grow.
Tim Petry, field production manager for Sunopta Grains & Food Group, a confectionary sunflower processor in Crookston, Minnesota, said confectionary prices are bucking the lower trend in other crops.
“The premium over the oilseed market (is) higher than (it has) ever been,” he said.
Petry believes the premium will last because of the seeding problems in the Dakotas, where most of the U.S. crop is grown.
“It directly affects our supply. I see growers quite happy with the prices.”
Petry hopes those good prices last until spring, helping convince farmers to grow more confectionary sunflowers.
Wiebe said sunflower yields have been phenomenal in Canada this year.
“Some farmers are talking numbers that I’ve never heard before,” he said.
It’s a different story south of the border, where a freak storm Oct. 4 dumped up to 120 centimetres of snow in portions of western South Dakota and southwestern North Dakota. None of the sunflower crop had been harvested.
“There was quite a bit of crop damage on some of those western areas,” said Wiebe.
“We’ve got quite a bit of reduced yield there in the States. I think the supplies are going to be down, and we’re going to use up what we’ve got.”
Sunflower oil demand has been strong, and Wiebe doesn’t anticipate problems marketing the 2013-14 North American supply.
He anticipates a fierce fight for oilseed acres between canola, soybeans and sunflowers next year, which should bolster prices.
“We’re going to see a lot of change when spring comes around,” he said.