Producers should be optimistic about 2010. After a 29 percent reduction in acreage in 2009, crop size appears to be about 1,750,000 tons, a 32 percent reduction. Carry-in tonnage should get back to normal, improving prospects for 2010 farm-level prices.
The 2009 harvest, the worst in recent memory, stretched over a three-month period with overcast skies and the continued threat of rain. A planting-time drought in the Southeast led to one-third of the crop being planted in June, and a mid-season drought in the Southwest disrupted what could have been a record per-acre yield. Too little rain turned into too much at harvest, causing major losses for low-lying fields. Late leaf spot and white mold were severe in some Southeast fields.
Shelling characteristics of the 2009 crop are different. Newer varieties have larger kernels, with the runner type almost the size of a Virginia type. Shellers report that jumbos will increase along with splits while mediums and number ones will be down.
Carry-in supply of peanuts has been reduced to about 700,000 tons, down from one million tons last year. With the pipeline requiring about 350,000 tons, market offers should improve. After last season, producers in the Southeast and Southwest are convinced that $400 per ton peanuts may pay the cost of production, but that’s with no profit for the farm.
Peanut Butter Soaring
The National Peanut Board reports a positive trend since March 2009 as new volume sales data for peanut butter show a significant increase as compared to 2008. The data from Information Resources, Inc., includes retail scan data from all retail outlets, including Walmart, most supermarkets, drug stores and mass market stores. Compared to the same period in 2008, the data show the following:
• July: a 7.92 percent increase
• August: an 18.60 percent increase
• September: a 4.79 percent increase
The U.S. government purchases for domestic feeding and child nutrition programs are up 73 percent the first three months of the new marketing year.
USDA reports peanut usage in candy rebounding with a 30 percent increase in October and a 15 percent increase for the year. Peanuts are a less expensive ingredient than other nuts, sugar or chocolate. Snack peanuts lag in the present economy, down 14 percent, representing 17 percent of the market.
The economic downturn worldwide has caused nut consumption to suffer. Canada is the best peanut butter consumer, but most European countries use peanuts as a snack, especially at the pub. The decline of the dollar against foreign currencies has caused U.S. peanuts to be a better buy, but markets have been slow to return. Exports should improve as the dollar remains low.
Argentina is suffering another early season drought, and acreage is expected to be down 25 to 30 percent. China is also reporting reduced acreage.
The move by USDA to lower the price to $23 per ton below the loan was a strategy that worked in preventing the government from receiving forfeited peanuts. However, the move filled the pipeline and kept prices down. The lower price could help producers get a counter-cyclical payment in 2009. There was no payment for 2008.
Competition by other crops for acreage will come into play this season. Cotton is certain to be a factor as prices soared to 77 cents per pound recently, and some farmers committed acreage to cotton. Corn is expected to push $4 per bushel, and if soybeans reach $12 per bushel, contracts will have to increase to get peanuts planted.
Then, there is the weather. Officials are predicting a colder, wetter winter which translates into a drier summer.
Exciting New Year
The farm economy is key to reviving the overall economy. Peanut producers are poised to make 2010 a profitable year. Update your technology. Attend the educational and convention meetings and be informed.
Leading Market Indicators
(as of Dec. 7, 2009)
• 2009 Crop (est) 1,813,800 tons
• 2009 Crop inspection total - 1,718,087 tons
• 2009 Crop acreage - 1,082,000 acres (down 28%)
• 2009 Yield (avg.) - 3,353 lbs/A
• 2009 Crop in loan - 1,244,018 tons
• 2008 Crop forfeitures - 5,892 tons
• 2009-10 Usage (3 mos.) - up 6.3%
• 2009-10 Exports (2 mos.) - dn 24.1%
• National Posted Price (per ton) Runners $424.40, Spanish $429.11, Virginia/Valencia $428.26