Sunflower seeds hit 16-year high

Sunflower-seed futures surged to the highest level in at least 16 year as stocks declined and local demand increased.

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Johannesburg - South African sunflower-seed futures surged to the highest level in at least 16 year as stocks declined and local demand increased in a year hit by the worst drought since 1992, the biggest grain farmers’ lobby group said.

Sunflower seeds for delivery in December climbed to R6 535 ($489) a metric ton on the South African Futures Exchange in Johannesburg, the highest closing level for a most-active contract since at least February 1999.

Futures rose a sixth straight day and touched R6 540 a ton during trading. Soybeans gained 2.3 percent to R5 675 a ton, the highest level in eight months.

Sunflower-seed stocks declined 27 percent in August from a year earlier, the South African Grain Information Service said on its website.

Demand for the oilseeds rose 15 percent to the highest since November. Both the Free State and North West provinces, which accounted for 89 percent of sunflower-seed output and almost two-thirds of corn output in 2014, experienced the worst drought in more than two decades earlier this year and the country is set for “extremely dry and hot conditions” in the coming summer season, the weather service said last month.

“The low domestic stocks level and the increased demand might, in the short term, continue to provide upward pressure on sunflower-seed prices," Wandile Sihlobo, an economist at Grain SA, said by phone Wednesday. "What is also driving the domestic sunflower price are the supply and demand figures.”

The country’s Crop Estimates Committee said in September the nation will probably produce 660 900 tons of sunflower seeds in 2015, 21 percent less than a year earlier.

"End users are obviously buying all their needs at almost any price and have pushed up the price to close to import parity," Brink van Wyk, a trader at BVG, said by e- mail.

The price of sunflower seeds has climbed 30 percent this year, while that of soybeans decreased 2 percent.

BLOOMBERG