|In This Issue|
|2013 Crop: What To Watch For|
|Interesting Harvest Results|
|PB For OK|
A lower-than-estimated planting report could bring markets to life
The 2013 U.S. peanut crop is off to a slow start. Producers faced a cold spring and markets that were just as disappointing. Many farmers wanted to plant corn, but after conditions were too cold and too wet, they waited to plant peanuts or cotton. Some producers even returned corn seed to the local dealer.
As cotton continued to improve in price and peanut markets were quiet as a mouse, many farmers optioned for cotton, which is now approaching 90 cents per pound. Areas that were too wet for cotton are being planted to soybeans. Weather for getting wheat harvested early was not good either.
The good news is that early tropical rains have replenished water supplies in the Southeast and Virginia-Carolina regions. Stands look good, and the higher temperatures have peanut plants growing well.
For our Southwest producers, news has not been as favorable. Drought continues to cripple Texas, and although rains have drenched Oklahoma, the most powerful tornadoes possible have carved destructive paths through the state as well.
U.S. Peanut Acreage
Peanut manufacturers failed to give the shellers a signal that they needed any more peanuts, given the ample supply in warehouses already, plus the amount of production that would be achieved from crop rotation schemes. The supply of peanuts would be enough, and prices would stabilize with a crop of about 2.2 million tons.
The question is how many acres were actually planted. USDA’s early estimates were a 27 percent decline. More recent estimates were down 34 percent. If the actual planted acreage is down by about 40 percent when USDA releases the estimate on June 28, market prices are sure to come alive and move higher for loan peanuts and the new crop. Most of the 2013 crop is not contracted, and some analysts believe much of the loan inventory is not contracted.
Market Loan Matures
Another marketing factor is what will USDA do to prevent peanuts from being forfeited to the government? The Market Loan program has more than 1.1 million tons in warehouses, compared with 240,000 tons last year, which will soon complete the nine-month loan deadline.
Buyers only offered $385 to $400 per ton for loan peanuts, and many farmers just sat on the tonnage and refused to sell at the low prices. If a farmer forfeits, the government will pay all costs, and it will be up to the Commodity Credit Corporation to sell the peanuts. The remaining 2012 peanuts are in the hands of producers, and if the 2013 crop is even lower than predicted, the 2012 tonnage may become more valuable.
American shellers are not too aggressive on pricing unsold peanuts while waiting for the peanut acreage estimate and a move by the government on market loan peanuts in warehouses as they reach the nine-month maturity.
Other Marketing Factors
Argentina’s crop quantity and quality remain unknown. Yields are highly variable. The variation was caused by a lack of precipitation during the season, delaying maturity and harvest. Brazil’s shipments have also been delayed because of weather-related problems. South African supplies have not improved, and China and India report less acreage and lower quality.
U.S. peanut stocks could find a market in the world trade if other countries fail to deliver, especially if the U.S. price is competitive and shellers can shell the inventory for quick delivery.
Export volumes for raw-shelled peanuts from the United States through March were 124 percent more than last year with Canada and Vietnam (headed to China) as the top buyers. In-shell shipments are up 217 percent over last year with Mexico, Germany and, again, Vietnam as the top buyers. March U.S. export shipments were up 165 percent over March of 2012.
Supply And Demand
If the 2012 peanut crop of 3,370,700 tons was reduced 34 percent, the 2013 crop would be about 2,250,000 tons. Predictions are that peanut food use in the U.S will increase 2.8 percent, presently down 2.1 percent after nine months, but all categories showed increases in April. After a March 2013 gain of 7.5 percent, April posted an 8.8 percent increase compared to the same month last year.
The bad news about supply is that unless exports keep climbing and the U.S. demand increases, ending stocks of peanuts are projected at 1,130,000 tons, too many peanuts to boost contract offers in 2014.
Farm Bill Under Construction
The Farm Bill regulations were extended until September of this year. That date could jeopardize the $36 per-ton direct payment that usually comes to base holders in October. USDA officials believe the payments will be made. Although farmer prices have declined, don’t look for the average to be below the $459 per ton necessary to activate a counter-cyclical payment.
The new 2013 Farm Bill passed in the Senate, which is now awaiting the House’s approval, is essentially the same market loan assistance program with slight changes. In both bills, farmers will be allowed to update farm base acres and, if payments should occur, it would apply to only 85 percent of the base.
Storage, handling and associated costs will be the same as the government is reimbursed by the first buyer, and a new reference price or adverse market payment price will replace the target price.
The Senate price was $523.77 per ton and the House reference price was $535 per ton with the price support minimum of $355 per ton. Farmers fought to keep the adverse market price because federal crop insurance failed to really cover crops such as peanuts and rice.
Move Those Peanuts
For prices to improve at the farm level, the industry has to move more peanuts to market. Consumers must be educated and excited about the peanut. It is a daily vitamin source and for world hunger programs, a “peanut medicine.” Promotions should gear up to urge more sales.
If farmers get a Farm Bill, leaders must be diligent in getting USDA to complete favorable, transparent regulations that the industry can understand and use to sell peanuts more profitably.
Leading Market Indicators (June 12, 2013)
• 2013 Acreage (est.) - dn 27%, 1,191,000 acres
• 2013 Production (est.) - dn 34%, 2,217,500 tons
• 2012 Production (est.) - up 84%, 3,370,700 tons
• 2012 Market Loan (6-12-13) - 2,639,860 tons
• 2012 Market Loan Redemptions (6-12-13) - 1,483,109 tons
• 2012 Outstanding Loans (6-12-13) - 1,156,751 tons
• 2012-13 Usage (9 mo.) - dn 2.1%
• 2012-13 Exports (8 mo.) - up 78.4%
• National Posted Price (per ton): Runners $424.65, Spanish $408.91,