Contracts for peanuts are normally
offered by shellers before the
start of the New Year, and
peanut producers can start their planning
for the new season. Not this year.
The industry seems to be in a holding
pattern, hoping and praying that the
massive volume of peanuts will continue
to disappear and buyers will want a new
supply in 2013.
Last season, producers were offered
$750 per ton in December, and even
the loan was bringing $1,000 per ton.
Peanut producers got excited and produced
a crop of more than 3,400,000
tons, 85 percent more than the previous
year. Planted acreage was increased more
than 44 percent.
The stars lined up for a perfect year
for peanut producers. Meanwhile, the
peanut market has gone quiet with little
or no offers for the 2013 crop and
only $30 per ton above loan for 2012
peanuts resting in the loan for $385 per
ton. It is not a pretty picture for the
peanut farmer with bills to pay and plans
to make for a new crop year.
Good Market News
For the peanut market, there is good
news, bad news and lots of questions
holding the peanut market at bay. The
good news is that export buyers are buying
U.S. peanuts. Lower prices and a
cheap dollar are attracting buyers from
around the world, even China. China is
buying massive amounts for peanuts and
crushing good quality peanuts into
peanut oil, this after India changed some
of their regulations and U.S. prices became
It is almost a buying frenzy as shellers
work around the clock to shell peanuts
and immediately ship to foreign markets,
many of which have not bought
from the United States in years. U.S.
exports have helped to stabilize the
shelled-price market when prices were in
decline because of the over-supply.
The question is, “Will the massive
volume of peanuts shrink enough to impact
the market in time for planting?”
Farmers again have alternative crops
with profitable prices at planting. Corn
is more than $6 per bushel, cotton is
hitting 80 cents per pound and soybeans
are over $12 per bushel. Peanut farmers
want to grow peanuts, but will switch up
to bring in a profit. More good news is
that seed supplies are abundant and of
excellent quality and the Southeast
drought seems to be coming to an end
with lots of winter rains.
Bad Market News
The bad news impacting the peanut
market is the slow return of the domestic
market. U.S. manufacturers will not
lower product shelf prices until the
lower-priced raw peanuts are made into
product. Peanut candy and snacks are
dragging, and peanut butter volumes are
about the same as last year. Overall,
USDA reports a 5 percent decline the
first 5 months. That has to change or it
may take a couple of years to overcome
the crop of 2012. USDA predicts a 7
percent increase by the end of July.
A price of $30 per ton on loan
peanuts is bad news, but may be better
than nothing. The farmer is selling below
the cost of production, which sends
the wrong signal to the market, especially
for the farmer that did not contract.
In most cases, shellers returned the
3.5 percent shrink and added the $30
per ton for $385 per ton. Seed growers
were receiving another $25 per ton for
$410 per ton.
Carry-forward volume is bad news,
too. Buyers watch that number to see
what will be available going into next
season, knowing that carry-forward usually
sets the price for the next season.
Going into the 2012 season, the peanut
carry-forward was estimated at 500,000
tons. Now, add another 1,070,000 tons,
and the over-supply is certain to impact
Beginning stocks of 500,000 tons,
plus production of 3,370,700 tons, gives
the market a 3,870,700-ton supply, a
record. Demand is estimated at
2,200,000 tons at home and 600,000
tons abroad or 2,800,000 tons demanded,
leaving about 1,070,000 tons
carry-forward. Some analysts are estimating
that exports could get to 800,000
tons. Last year, the peanut industry had
an 82-day supply of peanuts; this year,
the supply will last 240 days or about
seven and a half months.
Will the magic of the new varieties
repeat and set a new record? What about
acres? Peanut farmers need to reduce last
year’s acreage 25 percent to about
1,200,000 acres, average about 3,800
pounds per acre and produce a quality
crop of 2,280,000 tons for markets to return
to a profitable level for all segments.
Another question is what will the government
do after nine months of heavy
peanuts storage? Will farmers wait and
forfeit to the government and shellers
fail to exercise option contracts? If so, it
would not come at a good time for the
government or Farm Bill discussions.
The government wants to avoid any forfeits
and could lower the loan rate, allowing
shellers to buy at a lower price.
It has happened before. Some buyers are
betting on a “fire sale.”
Speaking of the Farm Bill, the peanut
team is set and, when the time comes, we
will fight to save a peanut program that
is favorable to farmers, consumers and all
segments. We have a fantastic, nutritious
food that deserves strong support. The
future of food, fiber, energy and shelter
for the world rests in Congress. It’s time
to get it done!
Leading Market Indicators
(as of Feb. 12, 2013)
• 2012 Acreage (est.) - up 44%,
• 1,608,000 acres
• 2012 Production (est.) - up 84%, 3,370,700 tons
• 2012 Average Yield (up 806 lbs/A) - 4,192 lb/A
• 2012 Market Loan (2-12-13) -
• 2012 Market Loan Redemptions (2-13-13) - 514,961 tons
• 2012-13 Usage (5 mo.) - dn -5.4%
• 2012-13 Exports (4 mo.) - up 42%
• National Posted Price (per ton):
Runners $474.65, Spanish $458.91, Virginia/Valencia $478.17.