Trends in the peanut world are
certain to change the future. A
record crop in 2012 of more
than 3,400,000 tons has resulted in low
prices at home and abroad. A drought in
India last year, plus changes in their regulations,
have brought Chinese buyers to
the U.S. market. The last four months,
U.S. shellers have been selling large
quantities to China to replace Indian
volume. The quality is superb and that
could attract China back to the U.S.
next season, if prices remain competitive.
Peanuts have been traded in Far East
ports for levels starting at $1,200 per
shelled metric ton up to $1,325. These
prices represent the lowest in the world
today, and vast quantities have been sold.
One analyst estimates exports could
reach 800,000 tons, more than double
the normal 300,000 tons of exports.
The Times They Are A Changin’
Some U.S. manufacturers thought
that, with the largest crop on record,
prices would continue to fall through
the summer, and they hesitated to buy.
Another trend never seen before is that
the United States’ shelling capacity has
become a new limiting factor in the market,
as the Chinese have bought up the
available volume until the summer.
Prices have moved up in the United
States from the mid 40-cent range to
the high 40s/low 50s. Chinese demand
for U.S. edible material to crush continues,
but nothing is currently available,
and sheller capacity is strained to
As one broker stated, “As soon as we
think we have all the answers, our peanut
market always surprises us.”
Evaluating Offers And Competition
Producers are listening to the export
chatter and evaluating old crop offers
and new crop contracts for peanuts.
Over 1.9 million tons remain in the
market loan warehouses, about 50 percent
under option contract and the remainder
Shellers have offered $35 per ton plus
return of shrink or $385 per ton. Response
was reported good, but farmers
have until July before any deadlines and
some have until October to sell or forfeit
to the government. Some farmers
have taken the $35 per ton, and others
are waiting while hoping for a miracle.
By late February, shellers finally offered
option contracts for 2013 crop.
Usually, contracts are issued earlier so
farmers can make financial arrangements.
However, due to the large supply
of peanuts and the increased export
interest, decisions on the 2013 crop have
been delayed. Most of the offers are for
loan, $355 per ton, plus an option
amount that equals to the total offer.
In the Southeast, shellers offered each
buying point a limited number of runner-
type peanut tonnage at $450 per
ton for the first ton, $355 plus $95 option.
If a farmer signs this contract, the
farmer may contract an additional 1,000
pounds per acre at $400 per ton. Farmers
interested in growing seed, under
specific guidelines, may add $25 per ton
or $475 per ton on the first ton and
$425 per ton for the next 1,000 pounds
per acre. In mid-March, a $500 per-ton
total was being offered since response
to the $450 per ton offer was poor.
In the Southwest, shellers are offering
runner-type contracts for $450 and $475
per ton for high oleic runner-type
peanuts. Shellers have offered $650 per
ton for Spanish-type peanuts, no limit
on tonnage. An offer for Virginia-type
peanuts is $550 per ton plus $25 per
ton for high oleic. In the Virginia-Carolina
area, shellers are offering $540 per
ton on Virginia-type peanuts. Buying
points were limited on tonnage.
Competition For Land
Fertile, cultivatable land is limited
from New Mexico to Virginia, and many
farmers have the equipment to switch
commodities when prices dictate. Corn
and cotton are excellent rotation crops
for peanuts, and farmers continue to
evaluate $6 to $7 per-bushel corn and 85
to 87 cents per-pound cotton. Producers
left peanuts two years ago for cotton
above one dollar and caused a major
supply swing in peanuts.
Farmers forward contract corn and
cotton when the futures market gets
right. Shellers and manufacturers must
not delay the top-dollar offer for peanut
contracts or land may not be available to
Marketing Factors To Consider
The drought in Argentina will be a marketing factor to consider. During the
short crop and higher prices in the U.S.,
the Argentine peanut industry took the
European export market. If the severe
drought continues, U.S. farmers may
have to fill that void.
USDA’s estimate of planted acres, to
be published on March 31, will also be
a factor. Last year, USDA estimated an
increase of 25 percent. The final acreage
planted was a 44 percent increase. If
farmers report a 40 percent drop, watch
for offers to go higher to urge farmers to
plant peanuts. The industry needs a 20
to 25 percent reduction in acreage with
an average of about 3,800 pounds per
acre to keep all segments of the industry
USDA’s estimated carry-forward is
also a factor. If the peanut industry has
about 1,300,000 tons remaining at the
end of the season, prices will be more depressed.
a carry-forward of
about 1,159,000 tons,
about a six-month supply.
But, if China and
other importers keep
buying and shellers can
get them shelled, the
carry-forward would be
manageable and not an
over burdening oversupply.
hit 800,000 tons, instead
of 600,000 tons.
USDA estimates domestic
demand of peanuts and peanut
products to increase five percent, but it
is presently down 9.8 percent.
Then There’s The Farm Bill
For the peanut farmer, you just have
to block it out of your mind and pray
that somebody in Washington, D.C.,
will take the lead and negotiate a fiveyear
Farm Bill that will protect the food
supply of this country.
All segments of the peanut industry
are united in wanting the market loan
program to continue. You can expect to
lose direct payments of $36 per ton, but
hope to retain a slightly higher target
price and the counter-cyclical program,
if peanut prices average below the cost
Farmers need to retain storage and
handling protection, allowing the first
buyer to pay these expenses. With Congress
and the United States broke, farmers
just hope to retain the $355 per ton
market loan and let the markets do the
Leading Market Indicators
(March 6, 2013)
• 2012 Acreage (est.) - up 44%, 1,608,000 acres
• 2012 Production (est.) - up 84%, 3,370,700 tons
• 2012 Average Yield (up 806 lbs/A)-4,192 lb/A
• 2012 Market Loan (3-7-13) - 2,639,759 tons
• 2012 Market Loan Redemptions (3-7-13) - 690,503 tons
• 2012-13 Usage (6 mo.) - dn -6.5%
• 2012-13 Exports (5 mo.) - up 42%
• National Posted Price (per ton): Runners $449.65, Spanish $433.91, Virginia/Valencia $453.17