It was a week of turmoil for the markets as political events in the US and Brazil impacted commodity prices. It has been a rough two weeks in the White House and this week the Brazilian president was under investigation of bribery. This sent the Brazilian Real sharply lower and triggered Brazilian farmers to start selling some of this year’s huge soybean crop. This led to selling in CBoT soybean futures contracts. Slow Brazil farmer selling to date has offered support to the US soybean market despite bearish world supply numbers. Traders fear that if the Real continues to weaken it could trigger an increase in farmer selling and flood the pipeline with cheap soybeans and take away US export opportunities. Sunflower prices weathered the storm well this week. Old and new crop prices were only down 5 cents to unchanged. On the plus side, the value of the US dollar has been on a downward spiral versus a basket of other currencies lately, dropping to the lowest level in six months. This is good news for growers and others who rely on exports. Weather and planting progress will remain the biggest short term question marks for traders. They will also look at the latest Oil World report as it dropped 2016/17 world soymeal use and increased world oilseed end stocks to a record 113.1 MMT versus 92.5 last year.
Cash and Act of God (AOG) contracts are still available. 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 $16.60 contract with 45% oil content gross return 10% higher per cwt and would raise the cash price to $18.26. An AOG contract at $16.10 per hundredweight to $17.71.