Market Looking Sunny for Confections in ’08 & Beyo
Friday, February 1, 2008
filed under: Marketing/Risk Management
The domestic and international markets for U.S. confection in-shell sunflower seeds are growing each year. Though domestic demand has averaged about 10% growth annually, exports actually have enjoyed the most dynamic growth — especially in the Middle East and Turkey, where exports have more than doubled during the past two years.
One could summarize the overseas market for U.S. confection sunflower seed over the past two years in a single word: awesome. And it promises to remain that way well beyond 2008.
Confection in-shell exports were almost 94,000 metric tons in marketing year 2006/07 — an increase of 32% compared to 2005/06, reports Bob Majkrzak president and CEO of Red River Commodities, Fargo. Exports to Spain, which is a premium market for quality, was up 16%. “But exports were up huge in Turkey and in Middle Eastern countries such as the United Arab Emirates, Jordan and Syria — by about 118%,” Majkrzak says.
Demand is particularly high for large- size seeds. The percentage of confection seed size over a 20/64 screen is becoming increasingly important with processors. The export market prefers the longer seed, so processors are buying more on seed size — which is becoming more of a price factor.
In numerous foreign countries (e.g., Spain, China, Turkey) consumers eat sunflower one seed at a time — much the way Americans eat in-shell peanuts. That’s why the larger seeds are desired. Large seed size is not as important in the domestic in-shell sunflower market, since Americans commonly consume sunflower seeds a mouthful at a time.
Within the United States, sunflower seeds have found their niche in the large market of people who enjoy outdoor activities; subsequently, sales peak in the summer months. Baseball players, truckers, outdoor enthusiasts and school kids are among the many groups of consumers who derive pleasure and nutrition from popping a handful of sunflower seeds into their mouths. As noted previously, this method of eating sunflower seeds makes American consumers unique in comparison to most other global consumers.
Domestically, about 25% of U.S. confection sunflower seeds are consumed as in-shell. Most are roasted and salted in the shell and eaten as a snack. A few years ago, sunflower seeds became available in flavors such as barbeque, sour cream and onion, Cajun, ranch, and hot and spicy. More recently, seeds that provide an extra jolt of caffeine and energy became available.
Steve Arnhalt, general manager of SunOpta Sunflower, says the new trend for domestic products is roasters offering consumers what are termed “jumbo” seeds. To be considered a jumbo, seeds need to be a 22/64 size in some products. “As long as consumers stay focused on health issues and healthy products, this bodes well for sunflower products in general,” Arnhalt affirms.
What’s developing in regard to large seed, color and other qualities?
Confection sunflower really means in-shell, and farmers should be selecting hybrids based on the percentage of large seed they will produce. Seed size and percentage nutmeat are two key variables to keep in mind when selecting confection hybrids. Seed size is generally evaluated as percentage over a ‘___/64th’ round hole screen, comparing 16, 18, 20 and 22, the four most common sizes. Typically, the larger the percentage of seed over a 20/64 round hole screen, the better.
Seed under 16/64 is generally too small and may be hulled or used as birdseed. The 16 through 18/64 seed size is primarily used for hulling to produce kernel. The 20/64 size is commonly used in the domestic in-shell markets, while seed that is 22/64 and over is used primarily for the export in-shell market.
Tim Petry, field production manager for Dahlgren & Company, foresees more hybrids evolving with better agronomics as the main focus. “We want to maintain large seed size, coupled with enhanced agronomics and yields, while keeping profitability to the producer in mind,” Petry says. “The advent of Clearfield® hybrid confection varieties is a huge step forward for the industry and will put us on a level playing field with other commodities,” he adds.
Chris Bohn, purchasing manager for CHS Sunflower, Grandin, N.D., advises growers to keep an eye on what the market is demanding. “And what the market is asking for is long-type confections with a lot of seed size to them. The long types will really provide the best market opportunities.”
Bohn says confection hybrid selection boils down to experience in knowing what performs best in your particular growing area. He also encourages growers to use good management practices when harvesting and storing the seeds to deliver the highest quality product possible.
Buyers prefer long-shape in-shells with a black center and pronounced outer white stripes. Quality factors are crucial to buyers, with the most important one being appearance. The second is good taste, with the third being acceptable insect damage levels. Bohn says buyers purchase with their eyes first and do not like off-color or highly scuffed seeds. Consistent shape and size is also very important. End-use buyers are pickier and very discriminating when it comes to buying in-shell.
‘A Product, Not a Commodity’
Red River Commodities’ Bob Majkrzak stresses that “if you really want to go for the premium market, seed should be taken care of from the very beginning. Figure on the fact that you are growing confection — and manage it as such.”
Producers sometimes view confection buyers as being finicky; but that often changes once they look at their product from the perspective of end users. “They know what’s not supposed to be in that bag of sunflower seeds,” Majkrzak says. “We need to look at marketing sunflower as a product, not a commodity. If you grow products, you need to know who the buyer is and how it’s being marketed, and you’ll typically make a better return.”
With more hybrids now producing large seed, how many acres will be needed?
In the United States, 90 to 95% of planted confection sunflower hybrids are considered “long types” by the industry. These would be seeds in a range of 5/8” to 3/4” inch in length. The remainder of the industry is divided into smaller round-shaped seeds and the extra longs that are 7/8” to 1” in length. In Canada, 75% of the seeds produced are the small round-shaped confection ones.
Confection processors had good beginning stocks to start this marketing year, along with good crop production in 2007. But they’ll need to replenish supply with another good crop in 2008.
Harvested confection sunflower acreage in 2007 was slightly less than 300,000. The confection industry is looking for a 20-25% increase in 2008 to reach a goal this year of 400,000 acres. Annual growth of 10-15% will be needed for the next two to three years to keep up with demand, as the industry focuses on reaching the 500,000-acre plateau.
Producers interested in growing confection sunflower are encouraged to check out this link for a contact list of confection processors: www.sunflowernsa.com/buyers/ suppliers/detail.asp?categoryID=3
Confection sunflower contracts offer Act of God production clauses. Some processors are offering storage incentives for later delivery and freight incentives for various locations.
The best online resource for tracking new-crop sunflower bids is the National Sunflower Association’s site: www.sunflowernsa.com/daily-market-news/
By John Sandbakken