marvel at markets and wonder what’s next. For peanuts, attitudes
are good at planting, although the weather has switched to an early drought
in the West and plenty of water in the Southeast. The media, harping on
the housing market, has talked everyone into a mini-recession. Agriculture
has alternatives and a profit potential, if inputs are kept respectable.
Estimated planted acreage was no surprise as the market had predicted
a 16 to 18 percent increase. Markets can use the peanuts and should remain
firm. Some officials doubt a 32 percent increase in Texas if water supplies
stay tight and cotton prices improve. Increased input costs have farmers
reconsidering peanuts, yet some credit lenders are skeptical of farms
with low yields and farmers that are poor risk.
Seed supplies are ample in most areas. The Virginia-Carolina region reports
some germination problems, and farmers will need a warm spring to keep
problems to a minimum. Seed prices for runners are around 83 cents per
pound for certified, with about a two-cent increase for registered seed.
Short supplies on new cultivars will cause some prices to be as high as
93 cents per pound.
Getting A Handle On Supply
The 2007 crop has been perceived as short, pushing up prices for jumbo
runners as high as 70 cents per shelled pound. Federal-State Inspection
shows 1,812,000 tons inspected. The January crop estimate posted 1,870,325
tons. The reported acreage of 1,230,000 acres averaging 3,130 pounds per
acre (estimated) would yield 1,924,950 tons. That’s a major difference.
Federal-State inspections are likely closer to the real numbers, and that
spells tight supplies.
Analysts estimate that 60 to 65 percent of runners are contracted
at $500 to $525 per ton. Virginia type had contracts for $525 to $600
per ton, depending on distance. Contracts were mostly for acreage and
estimated tonnage. Shellers quickly moved into the market, selling the
promised goods for medium runners at 58 cents per pound, a discount from
the present 68 to 70 cents per pound from 2007 crop. An acreage contract
is firm, and shellers expect it to be honored. A peanut contract is like
a corn contract: binding. Breaking a contract cannot go unchallenged in
Contract prices, $500 per ton for runners and $550 to $600 per
ton for Virginias, remain available at buying points. Unsigned farmers,
and those that booked only a portion, need to keep up with offers. Farmers
may option to store under market loan assistance ($355) and retain the
warehouse receipt for future sales. All shellers with warehouse storage
are public storage warehouses with tariffs on storage and handling that
must be posted at each location. This may be a good year to consider marketing
your own peanuts in warehouse-stored loans.
Peanut was up 4.8 percent in February, pulling to about even
for the year after being down over 5 percent. Peanut butter, an economic
savior during the mini-recession, and even snack peanuts are showing an
8.4 percent increase. Watch for an increase in shelf prices as raw peanut
prices are passed to the consumer, especially on peanut butter.
Exports are up only 3.9 percent for the year. With the value
of the dollar vs. the euro, anyone would think U.S. sales would be booming.
U.S. prices are lower than Argentina, and Chinese prices are high because
of demand at home. Argentina’s harvest starts in May, and the region
faces a farm strike due to government export tariffs on farm products.
If Argentina has harvest problems, U.S. exports could soar.
Down On The Farm
Most farmers have already decided what to plant. Better prices,
though not as good as once thought, and lower inventories have the peanut
market looking better. Prices should remain strong all season. The heavy
early contracting will keep excitement down, but keep your ears open for
prices on uncommitted farmer stock.
Leading Market Indicators
(as of April 7, 2008)
• 2007 Crop - 1,811,688 tons
• 2007 Crop Sold Commercial - 365,085 tons
• 2007 Crop In Market Loan - 1,362,760 tons; remaining - 745,915
• 2008 Acreage - unknown
• 2007-08 Usage (7 mos.) - down 0.6 %
• 2007-08 Exports (6 mos.) - up 3.9 %
• National Posted Price (per ton): Runners $475.19, Spanish $467.61,