Peanut farmers will harvest the
largest crop in history. Couple an
ideal growing season with new,
higher yielding varieties and little disease
and insect pressure and you’ve got the
recipe for a good crop.
Excitement About 2012 Crop
When peanuts hit $1,000 per ton last
year, farmers got excited, and it continued
when contracts opened at $750 per
ton. The real market was not that high,
but manufacturers wanted coverage after
paying $1.20 per pound for shelled
peanuts the previous season.
Shellers were excited, too, as seed was
selling for $1.10 to $1.20 per pound,
while the regular shelled market was at
$1.00 per pound.
Excitement has turned to disappointment.
The entire industry can be
blamed for major over-production.
Farmers were advised to secure contracts
before planting excess acres, but many
planted anyway. Acreage jumped 45 percent,
with Georgia increasing 56 percent.
Now, production is expected to be
2,959,750 tons, up 63 percent, and
could total more than 3 million tons.
Marketing Strategy
There is no market except month-tomonth
manufacturer orders. At some
point, they will start buying again, but
probably not until after using up higherpriced
peanuts purchased earlier.
The farmer’s only market is the $355
per-ton loan. Estimates are that 50 percent
of Southeast peanuts are contracted.
Shellers can purchase from the loan at
any time. Farmers have nine months to
sell uncontracted peanuts or forfeit to
the government for the loan rate. Shellers
should return with an offer around February
or March as prices stabilize.
What price will the farmer accept?
Anything above $355 per ton is better
than nothing. That would be an insult
to a farmer if the sheller wants him back
next season. Farmers may reject the offer
and forfeit to the government after
nine months. Storage and handling will
be paid, and the sheller is not likely to
buy without a market.
What will USDA do with the
peanuts? They could crush them for oil,
barter for production into peanut butter
for the hungry or for school lunches
or keep them in storage.
In the past, USDA has lowered the repayment
rate below $355 per ton and
sold out in a “fire sale.” The CCC and
USDA do not want peanuts to sell.
Help From The Farm Bill
The Farm Bill expired Sept. 30, but
the law authorized the Market Loan for
the 2012 crop, which applies until it is
sold. Congress should extend the Farm
Bill for 2013. Base holders will receive
$36 per ton in October for 2012 crop
and, if extended, another $36 per ton in
October 2013. The average price is too
high for a counter-cyclical payment.
In the House and Senate Farm Bills,
the Market Loan is continued, but not
direct payments. The House has a higher
target price at $534 per ton instead of
the current $495 per ton.
Peanut Markets
Reporting errors last season wiped
away a perceived 6 to 8 percent increase
in usage. After corrections, peanut usage
was down one percent for the year. Edible
sales for this year have peanut candy
down .2 percent, snacks down 1.3 percent,
peanut butter down 1.3 percent
and inshells down .3 percent. Higher
prices and poor economies have export
markets dropping 37 percent.
Recovery With Excess Peanuts
Excess peanuts means lower prices
across the board. USDA predicts peanut
demand to increase 4.8 percent and exports
to bounce back up 36 percent.
USDA predicted a carry-forward next
season of one million tons, about a halfyear
supply, so farmers will need to grow
peanuts next season, just not as many.
Crop competition will impact contract
offers. Farmers selling loan peanuts may
want to talk with shellers about contracting
not only the 2012 crop, but
possibly a portion of the 2013 crop.
Sell More Peanuts
U.S. farmers have produced the
largest, best quality crop ever. Every buying
point and sheller should have rawshelled
peanuts for the holidays. Everyone
in the business should give peanuts
for the holidays. It’s time for all segments
to sell more peanuts.
PG
Leading Market Indicators
(as of Oct. 5, 2012)
• 2012 Crop Acreage (est.) - 1,594,000 acres, up 43%
• 2012 Crop Production (est.) - 2,959,750 tons, up 63%
• 2012 Average Yield (est.) - 3,714 lbs/A
• 2011 Crop In Loan - 58 tons
• 2011 Domestic Usage (12 mo.) - dn .9%
• 2011 Exports (12 mo.) - dn -37%
• National Posted Price (per ton):
Runners $549.65, Spanish $533.91,
Virginia/Valencia $553.17.
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