The premium sunflower oil commands over oil made from soybeans will narrow and could even vanish next season, said Veysel Kaya, founder of Sunseedman in Edirne, Turkey. Global output of sunflower seeds will rise by at least by 2 million metric tons in 2016-17, with Russian and Ukrainian farmers producing the most ever, he estimates.
“The main reason behind the record world sunseed production is enlarged acreage, especially in Ukraine and Russia, the two giants with over 50 percent share in global production and trade,” Kaya said by e-mail. “In the Black Sea, sunflower is still the most lucrative plant.”
Sunflower oil currently commands a premium of about $100 a ton to soybean oil, he said. That could disappear like it did in the 2013-14 season as bigger crops mean production of oil and meal, which are byproducts, rise by about 1 million tons, he said. When oilseeds are crushed, processors usually get oil, normally used in cooking and biofuels, and meal fed to animals.
World sunflower-seed output will climb to a record 44 million to 45 million tons in 2016-17, up from 42 million tons a year earlier, Kaya said. Dry weather in the Black Sea region, which accounts for two-thirds of global sunseed production, reduced plantings of winter grains, leaving a bigger area to be sowed with spring crops including sunflower seed.
Ukrainian farmers may gather as much as 13 million tons, an increase of 14 percent, according to the broker. Growers in Russia will also harvest an all-time high 10 to 10.5 million tons, he said. Production will also rise in the European Union, Argentina and Turkey, he said, adding that output could still turn out smaller depending on the weather over the next two months.
Harvesting of sunflower seeds in the Black Sea region may start at the beginning of August, earlier than the usual Aug. 15-20, as plantings are "virtually over," he said. Developments in soybean supply and demand as well as a potential La Nina weather pattern are also major factors that could impact the market, he said.
A La Nina would threaten U.S. soybean crops, Danske Bank A/S said in a report last month, recommending customers hedge against the weather pattern.