anxiously await month-end
The season approaches with some optimism. Dust has not settled on the Farm Bill, and neither have figures of acreage planted to peanuts, which should set the market for any old or new crop peanuts that are uncommitted.
Option contract prices are up, but so are inputs. Everything needed to produce a ton of peanuts has increased from seed to equipment. Unless growers make an excellent yield, profits may not be as big as first thought.
How Many To Plant?
Be warned: if you want to grow peanuts next season for a profit, don’t overdo it. Shellers cannot resist selling a producer an 80-cent-per-pound seed when jumbos are netting 62 to 65 cents per pound in the edible trade.
The New Program
The 10,000 peanut growers remain at the mercy of the market composed of competing buying points, shellers and manufacturers. The Market Loan Assistance Program may be more of a burden than an asset in the future if production is at or below U.S. and export demand. The MAP is designed to help growers during over-production and low prices.
All the prices being announced by USDA are supposed to help the grower, but there is no transparency as each type – runner, Virginia shelled and in-shell, Spanish and Valencia – has different markets in different regions.
With no adjustment in loan or target price in the new bill and contract options above the target price, farmers will receive no counter-cyclical payments. There is talk of lowering the direct payment of $36 per ton and even eliminating it in some years. The idea of paying the farmer $50 per acre for implementing a special rotation program has been eliminated in the Farm Bill’s compromised version.
Demand Home And Abroad
Demand is increasing in the European Union and Mexico. Shellers are slow to release peanuts, keeping the market tight. The declining U.S. dollar has made U.S. peanuts cheaper in the world market. Look for increased sales, depending on the Argentine crop in a hot, dry summer. China’s lack of exports and some imports are factors that will impact the world trade. Many buyers are anxiously awaiting March 31 for the predicted U.S. acreage.
Bring On A New Year
Leading Market Indicators (as of Feb. 20, 2008)
• 2007 Crop - 1,802,622 tons