Imports Chip Away At The Quota System
By Tyron Spearman
By late December, Federal State Inspection Service had tested about 1,600,000 tons, 90 percent of the November estimate. Contract additionals were less that 225,000 tons.
Domestic markets showed 1,140,000 tons of quota delivered. The U.S. market is expected to remain stable as shellers had buybacks of more than 110,000 tons. Handlers converted export peanuts to quota with the buyback provision gobbling up most of the uncommitted stocks in the Virginia-Carolina region and the Southwest.
Southeast farmers were reluctant to sign contracts sharing pool profits, but often this was the only option except the loan guarantee of $132 per ton. Farmers needing funds to repay finance companies had little choice but to allow buybacks. These contracts helped build pool profits, and growers were hoping for another $300 per ton payback after all loan peanuts were sold.
In the Southeast, Segregation 1 loan additionals or exports were near 135,000 tons with about 58,000 tons of buybacks. That leaves only 71,000 tons for export markets and about 6,000 tons of quota in the Southeast loan.
National Peanut Board promotion campaigns should be in full swing by March, National Peanut Month. Markets need a boost after posting two months of declining peanut usage. For the first three months of the fiscal year, peanut usage is down 5.1 percent with peanut candy up 13 percent, snack peanuts down 8.8 percent, peanut butter down 12.9 percent and in-shells up 13.2 percent. Government purchases are down 18 percent, but are expected to rebound in the winter months.
Imports Keep Climbing
Imports continue to climb under the trade acts. From January through September 2000, 60,351 metric tons shelled were imported, compared to 51,521 metric tons last year. The largest importer was Argentina with 44,404, followed by China with 4,870 metric tons. Peanut butter imports dropped from 14,377 metric tons last year to 13,735 metric tons for the nine month period, with Canada importing 10,594 metric tons, followed by Mexico's 1,496 metric tons.
Imports keep chipping away at the quota system with farmer stock imports of more than 125,000 tons in the last nine months.
Exports from the United States have been impressive, although many were unsold but exported to avoid penalties. During August through September 2000, exports totaled 45,358 metric tons, up from last year's 26,874 metric tons. The top buyer was Canada followed by the Netherlands.
New crop prices have increased due to the disappointing Southwest crop. In December, prices jumped from $840 per metric ton shelled to $1,040 per metric ton shelled. Dealers urged buyers to switch to Chinese peanuts, but their price increased also.
Argentina planted a new crop in November and December. The crop suffered an early freeze, but a warming trend warded off the need for replanting. The Secretary of Agriculture expects 237,660 hectares to be planted, compared to 219,960 hectares last season. Argentina wants more access to the U.S. market and is gearing up to import 45,000 metric tons beginning in April.
Markets for quota and for loan peanuts should be strong for next season, but it is too early to predict. Quota for 2001 and price support will be the same, 1,180,000 tons farmer stock and $610 per ton respectively. Additionals price support will likely be $132 per ton, but USDA will officially announce that price February 15.
My advice is that you attend production workshops, talk to buying point managers about market developments and pay attention to discussions in Washington, D.C., about new legislation that could impact quota values.