Historically in the wild bird seed business, what is deemed “new crop” is the new pricing that the majority of oil sunflowers will be sold for during the upcoming year. Typically this will be at a lower price after the new crop becomes available in the fall, when supply is high and demand is strong. This continues until supply dwindles in the summer and we see a slow migration of price increases, peaking just prior to new crop the following year as supply continues to wane and demand remains strong. And the cycle repeats itself.
All of that is changing.
Traditionally, sunflowers, corn and wheat were used for both human food, cooking oils and animal feed products. Today we see a shift in all three of these items – corn is now being planted for Ethanol production which is subsidized by the US Government as a solution to our global dependence on oil. Wheat prices have doubled on the commodities market in the past year and are showing signs of holding strong. Sunflowers have been included in a value added proposition as Lay’s announced in May of 2007 that they would be switching their cooking oils for all of their Lays brand and Ruffles potato chips from corn and canola oil to strictly sunflower oil for it’s healthy heart benefits, driving prices into historical highs.
Farmers who do have sunflowers sitting in storage bins are hanging on to them as demand remains strong and supply runs low, thus creating a “sellers” market position, creating higher prices. Those same farmers are also not planting as many acres of sunflowers, as both corn and wheat are providing much stronger yields per acre, which means less available planting acres for sunflowers and other crops.
What does all of this mean?
It means that we will be paying more for wild bird seed ingredients, especially anything containing sunflowers. It also means that all competitive channels will be paying more for wild bird seed ingredients and those other channels, will likely be cheapening their mixes with inedible ingredients like milo.
