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Bidding for New Crop

Wednesday, November 15, 2006
filed under: Marketing/Risk Management

Coming off a short crop, and with a commitment to NuSun® mid-oleic sunflower oil by Frito-Lay, the world’s largest snack food maker, the sunflower industry is seeing some of the earliest and most aggressive new crop contracts in history, as sunflower market segments compete with other crops and each other for sunflower acreage in 2007.

The market is already focusing a great deal of attention on the next planting season, as all of the major crops such as soybean, corn and wheat, as well as specialty crops such as dry edible beans, will need additional acres. After this year’s anticipated smaller harvest, it is clear that sunflower acres will need to increase considerably as well to meet expected demand.

In September, the Archer Daniels Midland crushing plant in Goodland, Kans., came out with a 2007 new crop price of $14.00 per cwt with an Act of God clause, adjusted to $13.75 as of mid October. The competition for acres in the High Plains with winter wheat encouraged the much earlier than usual Goodland announcement.

In mid October, CHS Sunflower in Grandin, N.D. and Hazel, Minn. announced a 2007 new crop split contract price for their XL varieties of $22.00/$14.00 per cwt., with an average seed size of 75% over a 10 slot. This equates to $20.00/cwt. The contracts at this writing were for full production with an Act of God clause.

“It certainly has their attention; as guys look at their options for next year, hopefully this will prompt many of our long-time growers to stay with us growing confections,” says Glenn Kalsnes, a merchandizer with CHS Sunflower.

It is expected that other new crop pricing opportunities for confection and oil sunflower – including traditional linoleic (Cargill), NuSun™, and high oleic – will be announced considerably earlier than normal, recognizing this need for more acres and the intense competition for acres with other crops.

Crop producers interested in growing sunflower are encouraged to check out their new crop pricing options at local elevators, as well as with the various companies and processors that contract sunflower. Keep in mind that contract terms and price, as well as the number of contracts offered, can change quickly depending on grower response to new crop bids. – Tracy Sayler

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