|In This Issue|
|Betting The Farm|
|Reminiscing About 25 Years In Peanuts|
|Twenty-Five Years Of Technological Change|
|The UGA Extension Peanut Team 1985 To Present|
|Amadas Industries Celebrates 50 Years|
|Thank You, Peanut Industry|
Power-packed promotions should keep consumption up
Despite a whopping supply from 2012, no Farm Bill, a sequester situation and a full-on government shutdown, the peanut market is going strong.
Planting season was unusually cool and wet, and rains continued through the season affecting yield by possibly as much as 25 percent. Those who did not receive record rainfall will achieve good yields, but it will not match 2012.
With more than 1,350,000 tons carry-forward from 2012, producers did not receive profit-level contract offers and, responding to the market, reduced their acreage by 37.5 percent. The most recent acreage report shows 1,053,498 acres, 35.5 percent less than the 1,634,6128 acres planted last year.
If producers can harvest the acreage estimate at 3,603 pounds per acre, which is the yield estimate, U.S. production for 2013-2014 would be 1,855,500 tons. By type, peanut acreage is as follows: 75.1 percent runners; 19.3 percent Virginias; 3.6 percent Spanish; 2 percent Valencias. Ending stocks are still predicted at 1,059,000 tons, and that has kept contract offers on the low side.
With the heavy carry-forward, contracting was minimal. In the Southwest and Virginia-Carolina (V-C) region, shellers had to step up if they wanted to get peanuts planted as production costs increased. Virginia-type peanuts were being option contracted for $540 per ton in the V-C up to $650 per ton in Texas and Oklahoma.
In the Southeast, the heavy supply of runners in the loan, which were to be redeemed by October, caused shellers to be cautious. One sheller offered a flex contract of 50 percent of tonnage at $500 and 50 percent at $425, allowing the farmer to take advantage of price increases in the market. Farmers were to be paid $425 per ton at harvest, which equated to 49 cents per pound shelled, and for each one-cent increase in shelled price, the $425 per ton was increased $13.50 per ton.
At press time, the shelled rate was 52.7 cents per pound. Shellers mostly contracted at the total of $500 per ton with some recent $525 per ton option contracts.
While farmers and shellers were talking contracts on the new crop, shellers were having to redeem or buy peanuts that were stored in the loan from the 2012 crop. Shelling of the 2012 crop was continuing as capacity allowed. Quality was excellent and export markets were strong, so shellers have continued to redeem peanuts from the loan.
In August, only 20,796 tons were forfeited and some of the 250,000 tons with contracts ending at the end of September and October were expected to be forfeited. However, the government shutdown put a halt to buying loan peanuts or filing any paperwork.
USDA predicts U.S. peanut consumption could increase 2.9 percent from 2013 to 2014. Record usage was recorded again at times in 2012-13. Compared to last July, peanut usage was up 24.2 percent for all categories. Overall, annual peanut usage ended with a modest 1.44 percent increase, slightly higher than USDA’s prediction of a one percent increase in domestic usage between 2012 and 2013.
In the last two months, the market is even stronger and promotions are increasing around the “power of the peanut,” so the trend is expected to continue. In August, peanut usage was up 2.83 percent, another good sign.
U.S. exports continue at a record pace as well, with all peanut exports up 84 percent over last year. Raw shelled, the largest category, was up 137 percent. Peanut butter is up 19 percent and inshells are up 192 percent.
Can the United States maintain these levels into next year? It depends on production, competition and prices. The Chinese, shipping through Vietnam, have stopped buying.
Prices for U.S. peanut exports as a shelled metric ton are still relatively low at $1,360 CIF and that should keep the U.S. peanut the least costly in the world market. U.S. peanut prices will likely remain stable even though the 2013 crop is smaller. Shellers re-arranged shelling schedules to meet export demand; quality was reported as excellent.
Most U.S. shellers are not aggressively marketing the 2013 crop abroad until they get a handle on the volume and quality, pushing sales of the remaining 2012 crop in the loan. Reports indicate that China has few peanuts remaining to meet EU quality regulations, and rumors have surfaced that China will be back for some U.S. peanuts.
The Farm Bill expired Sept. 30, 2013. Industry leaders have fought a major battle to keep the peanut program in both the House and Senate bills after the Senate had dropped the program. Thank Sen. Thad Cochran of Mississippi for helping restore peanut and rice protection into the bill.
Rep. Frank Lucas (R-OK) has kept the faith and is pressing for leadership to allow him to present a five-year Farm Bill. The nutrition title and the commodity programs have been re-united, and it is ready for conferees to be appointed to reconcile the differences.
The one-year extension means producers will receive the $36 per ton direct payment in October. USDA says base owners will receive the payment with a 5.1 percent reduction, per the sequester, when the government reopens.
USDA says exports will be down 41 percent this year. I don’t know. Lots of new customers bought U.S. peanuts last season and many will return. With a slightly rebounding U.S. economy, continuing trends in healthy snacking, new power-packed promotions, a quality product and reasonable prices on old and new crop, it appears to be a good year ahead for the peanut.
The remaining carry-forward may keep prices low, but the demand for more and more says that it may not stay that way. Never underestimate the power of the peanut or the producer. PG
Leading Market Indicators (Sept. 25, 2013)
• 2013 Acreage (est.) - dn 35.5%, 1,030,000 acres
• 2013 Average Yield (est.) - dn 589 lbs/A, 3,603 lbs/A
• 2012 Market Loan Total - 2,639,860 tons
• 2012 Market Loan Remaining - (9-25-13) - 268,535 tons
• 2012-13 Usage (12 mo.) - up 1.44%
• 2012-13 Exports (12 mo.) - up 84.0%
• National Posted Price (per ton): Runners $464.74,