This week’s USDA announcement on the latest trade aid payment package surprised traders. The trade had expected to learn separate payment rates for soybeans, hogs, corn, and other crops rather than the announced direct payments that are not tied to a specific crop but rather to aggregate planted acres. The announcement of another $14.5 billion in direct payments left traders feeling anxious that the current US-China trade war will drag on. The markets continue to closely watch near-term weather forecasts, which suggest planting progress will struggle to make significant inroads through at least the end of May. Spring rains may continue to hamper planting progress as the latest precipitation maps from NOAA shows most of the Midwest and Plains could see another 2” to 4” through May 30. Traders expect a big acreage shift to soybeans as spring planting progress lags in the key corn producing states. Sunflower prices ended the week mixed. Old crop NuSun was unchanged to up 20 cents with high oleic unchanged. New crop NuSun was unchanged with high oleic down 15 cents to unchanged. Sunflower planting is underway in all states and is behind last year at this same time and the five-year average. Drier weather conditions are forecast for the Dakotas and Minnesota and should allow for good planting progress. With oilseed planting well under way the markets will begin to trade US weather and crop progress conditions to a greater degree.
Sunflower is included in the plan for 2019 Market Facilitation Program (MFP) payments announced by USDA last week. Payment will be based on a single county rate for all covered commodities multiplied by a farm’s total plantings to all crops in aggregate in 2019. The per acre payments are not dependent on the crops that are planted in 2019 to not influence planting decisions. Each county will be assigned an MFP payment rate based on historical production. USDA did not release information on payment rates when announcing the program. All growers in a county will receive the same rate, regardless of the eligible crop grown. Payments will be based on reported planted acres for 2019 which cannot exceed 2018 plantings.
2019 new crop sunflower contracts are available at the crush plants with cash and Act of God (AOG) contracts available. Something else to consider is the oil premiums that crush plants pay on sunflower. Sunflower is the only oilseed that pays premiums for oil content above 40%. Considering oil premiums that are offered at the crush plants on oil content above 40% at a rate of 2% price premium for each 1% of oil above 40%; this pushes a contract with 45% oil content gross return 10% higher per cwt.