Record-High Confection Contracts?
Wednesday, December 15, 2004
filed under: Utilization/Trade: Confection-Non-oil
A short supply of confection sunflower in 2004 could mean production contracts near record high prices in 2005.
Confection sunflower growers and processors faced myriad challenges this past year in a growing season that seemed to become more uncooperative as one traveled north through the sunflower growing region of North America.
“You always have those benchmark years, and I guess we got it,” says Bob Majkrzak, president and CEO of Red River Commodities, Fargo, N.D. “Mother Nature played a dirty trick on us, and it wasn’t just sunflower. There were small grains that didn’t get harvested, and soybeans and corn that got plowed down because it didn’t mature. Sunflower actually handled early frost better than many of the other crops. Of all the issues that affected this year’s crop, from reduced acreage, delayed planting, the cool season, I think it was the wet weather in that first week of September in the northern areas that hurt the most with Sclerotinia becoming a factor. We just have to realize that this type of thing can’t happen every year and just look forward.”
Majkrzak says the Sclerotinia was probably the worst he’s seen since 1999. “There were still areas of the Dakotas that were pleased with their confections, as were we. It just goes as the weather went this year,” he says. “It illustrates again the importance of getting results from Sclerotinia research.”
On the bright side, he says the confection crop in the High Plains was probably the best it’s been in four to five years. “There’s a lot of producers down there extremely happy with their yields and quality, as are we.”
All confection processors are already offering production contracts for 2005, with prices extending into the $20s with various incentives.
“Confections aren’t for everyone. It’s not for every sunflower grower and it’s not for every sunflower acre. But we want to encourage the good growers with contracts at prices that are at all-time highs,” says Majkrzak. “Our buyers are saying ‘we’ll pay for the quality, as long as we know we’ll get the quality and the volume we need and if not, we’ll go somewhere else.’ We don’t want to go the way of the kernel market, where we’ve lost our leadership position. As an industry we want to ensure holding onto our leadership position for American in-shell products by putting a price out there that will reward those growers who know and understand the needs of the confection market.”
Majkrzak says there are improved hybrids available for 2005 that give consumers the quality they want, as well as better yields for growers. “We want to continue stressing those hybrids that produce 80 to 90% useable in-shell, nice black and white striped, larger-shaped seed with a high percentage of over 20s and 22s.”
Bill Sullivan, a field and seed production manager with Dahlgren, Crookston, Minn., agrees that in 2005, confection and hulling oil contracts will continue to be profitable rotation options against other crops. “Sunflowers have great profit opportunity with Act of God protection. Growers will see strong demand in a growing market, and hybrid selection will prove to be an important tool.”
Sullivan advises confection growers to work with company field agronomists to select the right variety for their operation and geographic location.
“If early maturity is what you are looking for D-9532 is an option, bred for northern regions with early maturity, rust tolerance and excellent uniformity at dry down. D-9530 offers uniformity with improved seed size in a single cross mid-maturing variety.” He explains that single cross varieties bloom more uniformly for easer crop monitoring for insects thus lessening growers insect control costs.
Sullivan says Dahlgren will also be marketing D-9518 in 2005, a top yielding, full-season long seed type that has demonstrated excellent standability with stay green characteristics. He points out that the stay green characteristic this past season showed to be less susceptible to the formation of sclerotinia stock rot.
He says Dahlgren will again offer oil-hulling varieties (all NuSun for added marketing flexibility) in 2005: DO-4421 and DO-4422, and in limited supply, DO-4440. all of Dahlgren's oil hulling varieties are NuSun varieties for added marketing options.
Chris Bohn, purchasing manager of Cenex Harvest States Sunflower, Grandin, N.D., says a number of the ‘con-oil’ hullers did well this year, with good yields of 1,400 lbs to 1,700 lbs, even into north central N.D. “So in this year where there were 10 to 20 bu. soybeans, that 1,400 lb sunflower looks good.” Bohn says CHS has several new hybrids on the market for 2005 with improved yield and agronomic performance.
He advises confection sunflower growers to “take a serious look” at production contracts with an Act of God clause, and full production clause that CHS offers for extra-longs, that help cover both less-than-expected and greater-than-expected yields.
“With the Act of God contract, you’re not afraid of falling short on bushels, and you can lock in a price. That can be important, as we saw with soybeans, where the price fell off from February,” Bohn says. “It’s not $10 beans in February and $5 in November. It’s $20 in February and $20 in November. Those values for confection sunflower are there, and it can be locked in.” – Tracy Sayler
Confection processors on the Internet:
CHS Sunflower: http://www.chssunflower.com/
Dahlgrens and Company: http://www.sunflowerseed.com/
Red River Commodities: http://www.redriv.com/