Water and balance are two keys
to the 2012-2013 peanut
market. The Southeast and
Southwest are starting the season with
moisture levels at record lows and rainfall
during the season will be required to
make the crop.
If rains occurs, then balancing supply
with demand will be the key factor in
prices of the produced peanuts.
Buyers know that a big increase in
the acreage, predicted by USDA at 25
percent, coupled with high-yielding new
varieties could destroy prices at a profitable
level.
Kick-Off Of New Season
Seed supplies are short and germination
is not up to par. The Southwest’s
seed suffered extreme conditions in
2011. It could take the region years to
recover. Why not import seed from the
Southeast? Southeast supplies are tight
and handlers do not want to mix higholeic
production in the Southwest with
non-high oleic from the Southeast. Further,
seed from a certain region does not
reproduce as well in other regions.
Balance is a key factor in seed treatments.
With raw-shelled peanuts at one
dollar per pound or more, the goal is to
only treat needed seed and sell the remainder
to the market.
Lack of moisture in April has potentially
delayed the crop cycle. Farmers in
the drought-stricken Southeast are having
to wait for rain to plant. With the
planting equipment in today’s farming
operation, farmers can catch up, if it
rains. High winds and early season
record heat have added to their woes.
Acreage
Buyers are betting on overplanting
and that prices for raw-shelled peanuts will decline. Early contract offers had
farmers optimistic about peanuts; however,
as competitive crop prices declined,
so did peanut contract offers. The possibility
of overplanting was real and
shellers tried to discourage it by limiting
contracts to a certain acreage, some limited
poundage and even seed became a
factor. Balancing production of peanuts
to equal demand is price driven.
Peanut Demand
Demand for peanuts remains strong.
Although the volume dropped in March
about five percent, peanut usage for the
year is up 4.8 percent. By category,
peanut candy is strong, up 15.7 percent,
peanut snacks are even with last year
and peanut butter is up 3.6 percent.
Supplies could get tight before the
next crop with the loan holding only
400,000 tons in May compared to
750,000 tons last year. Most shellers report
the $1,000-per-ton loan peanuts
have all been redeemed. Imports of peanuts from Argentina and Nicaragua
have been a factor in pricing.
Peanut Supply
Peanut specialists have estimated that
acreage would increase about 16 percent,
not 25 percent as predicted by
USDA. Should farmers plant 1,328,000
tons, up 16.4 percent, production would
be near 2,200,000 tons based on an average
yield of 3,300 pounds per acre,
and prices should remain strong. Carry
forward has already dropped to 443,000
tons, about half of the carry-forward
level last year.
Farm Bill Is Just Nuts
Within the next 90 days a new Farm
Bill must be completed because all programs
expire Sept.1, 2012. America
needs to save money and farmers are the
first to agree, preferring money from the
market, not the government. Leaders in
the Beltway better recognize that the affordable,
abundant food supply is not
only a matter of national security for
the U.S., but also critical for a rebounding
economy.
The peanut program has worked well.
The commodity section of the Farm Bill
costs less than one-quarter of one percent
of the federal budget. We were just
peanuts. Now it appears peanut farmers
have lost the direct payment ($36 per
ton), the counter cyclical payment and
the only thing left is crop insurance,
which in its present form has not
worked. The market loan will help the
shellers, but can the farmer borrow
money on $355 per-ton peanuts?
Show Time
It is show time...let’s show the world
we can grow and deliver the best quality
peanuts in the world. PG
Leading Market Indicators
(as of May 3, 2012)
• 2012 Crop (est.) - 1,422,000 acres, up 24.7%
• 2011 Crop Sold Commercially - 310,620 tons
• 2011 Crop In Loan - 1,402,033 tons
• 2011 Crop Remaining In Loan - 458,976 tons
• 2010 Crop In Loan (at same time last year) - 814,842 tons
• 2011-12 Usage (8 mo.) - up 4.8% - March - dn - 5.8%
• 2011-12 Exports (7 mo.) - dn -22.7%
• National Posted Price (per ton):
Runners $1,049.52,
Spanish $1,040.87,
Virginia/Valencia $1,053.26.
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