Unbelievable, warehouse buster,
tidal wave, record breaker –
these are just some of the
words being used to describe
the 2012 crop by economists and industry
market watchers. This crop didn’t just
break records; it destroyed records by a
wide margin. The up-and-down nature
of the peanut market for the last 10 years
means that with 2012 being up, and way
up, 2013 can be expected to be down.
“It’s unbelievable that we had the crop
that we had and that we handled it,” says
Tyron Spearman, executive director of the
National Peanut Buying Points Association
and marketing editor of Peanut
Grower. “According to Federal State Inspection
Service, 3,379,000 tons were delivered.
Of those, 573,000 were bought as
they crossed the scales for immediate use,
with 2,600,000 tons in the loan.”
Reasons Beyond Acreage Increase
Several factors went into the huge crop
and, as Spearman puts it, “all the stars
lined up” for a simply huge crop.
“We have been on a roller coaster ride
for a number of years,” says Dell Cotton,
executive director of the Peanut Growers Cooperative Marketing Association in
Franklin, Va. “The quality issues of the
Southeast crop in 2010 and 2011, along
with the record-low acreage planted to
peanuts in 2011, because of cotton prices,
led to near record-low supplies after the
Prices shot up and acreage was increased
44 percent over the previous year.
In reality, a very small portion of the crop
was contracted for the higher price.
Bucking The Yield Trend
Besides the significant increase in
acreage, the average yield was a record by
a wide margin.
Nathan Smith, University of Georgia
Extension economist says the average yield
for all states had been trending upward because
of new, higher-yielding varieties.
“The last national record was in 2008
with 3,426 pounds per acre,” Smith says.
“According to the trend, the average yield
should have been 3,450 pounds per acre.
Instead, it was 4,192 pounds per acre.”
Much of the credit goes to newer,
higher-yielding varieties, but everyone
knows that weather plays a big part.
“We did not get the severe heat in August,”
Spearman says. “In Tifton, the average
temperature was 89 degrees when it
is normally over 100 degrees. Also, in August,
we got some really good rains at the
right time and that helped to keep the
temperature down as well.”
Who Is Buying?
Now, the industry must figure out how
to sell a big pile of peanuts.
“We have twice as many in the warehouse
on this date as we did last year, but
shellers are going as hard as they can because
people are wanting the peanuts,”
Who’s wanting peanuts? China, says
Spearman. “Prices dropped in Rotterdam,
and China is buying. China grows a lot
and usually buys from India as well, but
this year they are buying from the United
So the export market has rebounded,
but now it’s the domestic market that’s
Cotton says we have lost consumption
due to the higher prices of last year, even
though the $1,000-per ton price was only
paid on a small portion of the crop.
“Current peanut product prices reflect
this past year’s contract prices, and it will
be much later before the oversupply will
be reflected in consumer prices.”
Hope For Consumption To Rebound
About 40 percent of the 2012 crop was
contracted, and that’s slowing down prices
dropping in the grocery store because
those higher-priced peanuts need to be
used up first.
Spearman says the market, overall, is
slowly moving. “We are whittling the pile
down. The question is, ‘how fast can we
In all likelihood, the 2012 record crop
will hang over the market for the next
couple of years.
“You are taking significant risk if you
plant peanuts with no contract or in excess
of the contract,” Cotton says.
Smith says he thinks shellers and manufacturers
will try to find a price that will
drop acres below 1.2 million. “I expect
$400 or lower contracts at first.”