Oilseed Sunflower
Historically, demand for oilseed sunflower depended heavily on the export market for either seed or oil sales. With the advent of NuSun® and high oleic sunflower, the market has switched almost exclusively to a U.S. and Canadian base. Both of these oils are very stable and do not require hydrogenation as do competitive oils, such as traditional soybean and canola oils, when used in a frying application. Oilseed sunflower prices now are more determined by their relationship to corn, cotton and canola oil prices. Large domestic users tend to buy in advance, thus seed prices are not as likely to be as volatile as publicly traded commodities, such as wheat, soybeans and corn. Minor crops like sunflower do not have futures markets, thus the most common cross-hedging mechanism is to use Chicago Board of Trade soybean oil contracts if desired. Over the past few years more opportunities are available to producers to pre-sell a portion of their crop well before planting begins. This ensures sunflower industry members of a supply and allows a producer to "lock in" a price for a portion of their production. Storage of oilseed sunflower is necessary. The domestic market needs a year-round supply of oil and oilseed crushers need a steady supply of seed. To achieve this crushers provide producers with price premiums for storage for delivery in the post harvest months. Oilseed sunflower producers have the advantage of multiple market options: selling to oilseed crushers, the hulling seed market, or the bird food market. Supply and demand drive prices in all three markets. These markets are very specific and unique, with different values associated with them.
Non-Oilseed Sunflower
Non-oilseed (confection) sunflower production is geared to the "in-shell" snack food market. Today's confection hybrids produce a significant level of large seeds. Producers often are paid on a percentage of large seed. Quality standards for confection sunflower are high and allow little tolerance for off-color and insect damage. Most confection sunflower is produced on a contract basis. As with oilseed sunflower, producers are able to pre-sell a portion of their crop well before planting begins. This allows a producer to lock in a price for a portion of their production and in return ensures domestic and foreign users of a supply. Historically, the non-oilseed price has exceeded the oilseed price in a range of $3.50-$6.00 per hundredweight.
Dynamics to consider as a sunflower oil or confection seed buyer
As a buyer, to insure you have the oil and or seeds you will need throughout the year you will need to stay in touch with your supplier and commit to purchases as early as possible. That, in turn, allows your supplier to offer a competitive price to the producer and will persuade them to plant sunflowers. Producers begin making their planting decisions shortly after harvest. Sunflower planting will begin in April-June, but producers are well on their way to finalizing their planting decisions in November and December. Producers have many crops to choose from when making planting decisions so competition can be intense among crops. Topping the list are soybeans and corn. Other crops include cotton, wheat, barley, flax, dry edible beans, canola, sorghum, etc. Sunflower can only be planted on the same piece of land one out of every three or four years so that disease and other pest issues do not become a problem. During the years sunflower is not planted on a particular piece of land other crops such as corn and wheat are planted in a rotation basis. Producers choose the crops they will plant based on which crop may give them the best profit opportunity and fits in their crop rotation.
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