Peanut farmers prepare for the 2017 peanut crop in good condition, marketing wise. There is no surplus of 2016 crop peanuts, except for a few lots with European Union edible quality, mostly jumbo runners. The market is very tight and that is likely to continue domestically until December 2017. Export markets will be influenced by the present crop in Argentina, which looks good at this time, and China’s peanut harvest.
The wipeout of U.S. peanut inventory was partly caused by an error in USDA’s estimate, which is concerning for the future. However, more of the inventory was moved by purchasing from China and other producing countries, including India, Argentina and the United States, who are all consuming more peanuts each year, causing the world peanut market to increase in volume.
Consumers around the world, like the United States, are interested in health and wellness and understand that peanuts are a healthy food. Sources indicate that in calendar year 2016, the United States exported a record 970,986 farmer-stock tons of peanuts and peanut products. That’s 26 percent of the crop sent overseas.
Have peanuts entered into a new era? Some industry members think so because peanuts are now the low-priced ingredient and the world’s most sustainable source of protein with a low carbon footprint that uses less water than any other nut. Health research shows peanuts reduce the risk of death by playing a major role in reducing heart disease, cancer and diabetes. Researchers have also made great strides recently with peanut allergy. Add to that, peanuts taste great and are equally loved by kids and adults and all these positives should really boost sales.
2016 Wrap Up
Due to the low average price in 2016, many farmers still have peanuts to price before Jan. 31, 2018, the end of the marketing year or the nine-month deadline. These 2016 peanuts were simply stored in the loan and not contracted. Farmers are receiving $500 and above per ton and some contracts have a deadline for pricing of March 31. That’s much better than the $375 per ton offered at harvest.
Most farmers with a peanut base signed up for the Price Loss Coverage (PLC) program, and they are expecting an estimated $147 per-ton PLC payment in October for 2016 marketing year. USDA had predicted $151 per ton.
2017 Contracts Open Strong
Early 2017 peanut contracts opened at $500 per ton for Southeast runners, dropping to $475 per ton after heavy sign-up. Southwest runners were also $500 per ton for high oleics and $550 for high-oleic Virginia-type peanuts. Other Virginias opened with $500 per-ton contracts. Some states had a $50 bonus for planting high oleics and some reduced contacts by $25 per ton for freight differential.
Considering how the PLC payment is calculated, if average prices stay close to the $500 per-ton range in 2017, peanut farmers can expect little to no PLC payment for their 2017 crop, which would not arrive until October 2018. That would be a positive for peanut legislation work and proof that the peanut program works.
2017 Peanut Acres
The official peanut acreage estimate arrives from USDA on March 31, 2017. Last year, acreage was estimated at 1,476,000 acres, a 9 percent drop mainly influenced by the perceived over supply. The final acreage harvested was 1,547,000 acres. A recent survey of Extension peanut specialists offers the estimate of 1,659,000 acres for peanut planting, which would be a 7 percent increase. A Georgia survey showed a 10 to 15 percent increase depending on cotton prices. With a two-ton average, provided farmers have good weather, the crop could be 3,318,000 tons. Can the market sell that many?
January 2017 peanut usage was about the same as last year…up only .2 percent. The shining star was peanut butter, up 5 percent and now up 3.6 percent for the year. Peanut candy is still strong, up 9.4 percent for the year, with peanut snacks down 7.6 percent. Overall, peanut usage is up 1.3 percent for the first six months. The National Peanut Board has estimated the annual per-capita peanut usage at 8.6 pounds per person. Hopefully, the “March Is National Peanut Month” promotions will have the numbers up even more.
U.S. peanut exports continue to thrive. December posted a 44.4 percent increase over last December and the five-month exports are up 12.6 percent. Raw-shelled peanuts are up 19.2 percent as the Netherlands increased 49 percent over last year. In-shells are up 7.4 percent for the year. China and Vietnam still strong are up 44.7 percent and 78 percent respectfully. Peanut butter is down 13.7 percent, but overall, U.S. peanut exports are likely to reach the USDA prediction of 750,000 farmer-stock tons in 2016-17.
Stage Is Set
If the higher price is available at your buying point, book at least a portion of the peanut crop. Don’t plant until the soil is the proper temperature and don’t plant too early or too late. Use certified, treated seed and an inoculant. Be aware of U.S. planting intensions, Argentina’s weather and China’s 2017 peanut production, which are all key marketing factors.
Good luck. The world is anxious to buy and enjoy your top-quality U.S. peanuts.