Late-planted peanuts after wheat may be a factor for 2008
By Tyron Spearman
is changing its outlook and structure. Peanut farmers are trying to assess
where they fit in and if alternatives are better than growing peanuts.
That sends uncertainty across the industry as economic factors are evaluated
by all segments.
Competing For Acres
Did shellers get enough acreage committed to peanuts? What if prices for corn, cotton and soybeans continue to rise? Is the contract binding for peanuts or can the farmer switch to a higher-priced commodity? The price of fertilizer and nitrogen is weighing into the equation. Peanuts need less fertilizer and make their own nitrogen…advantage peanuts. Could this be the year, farmers plant too many peanuts and bust the market? The industry has a dilemma.
Finding a balance has the market nervous and cautious. Don’t look for much to happen until planting indications are released.
The 2007 crop was better than expected, about 1,870,000 tons. USDA predicts an ending stock of about 700,000 tons with a demand of about 1,900,000 tons, meaning the industry will reduce ending stocks to about 650,000 tons. About 300,000 tons are needed before a new crop arrives, cutting supplies and increasing prices.
Export demand continues about 300,000 tons with major customers in Canada and Mexico, mainly because of logistics. Some loyal customers in Europe still promote U.S. quality and continue to buy. As the dollar continues to decline against the Euro, U.S. peanuts become cheaper. However, the increase in prices has taken away the exchange advantage. Ironically, other sources are not available with Argentina reporting a summer heat wave and China planting less and keeping supplies at home.
The new idea of a four-year rotation could net a farmer $50 per acre under the conservation section, but most irrigated peanut farmers will have difficulty meeting the requirements. Separate payment limits are nice to retain, but not as important at present market price levels.
Early predictions point to less corn and more soybeans and wheat. Late-planted peanuts after wheat will be a factor for the 2008 crop. For 2008, buy fuel before prices increase, look for ways to cut costs and keep “in the know.” The peanut industry, along with all of agriculture, is changing. Pray for rain.
Leading Market Indicators (as of Jan. 7, 2007)
• 2007 Crop - 1,783,935 tons