• Everyone, without exception, I’ve talked to about peanuts over the past few weeks is urging growers to wait as long as they can to make decisions on how many acres of peanuts to plant.
If you had asked me around Christmas time how many peanuts Southeast growers would plant this April and May, I would have said maybe half a crop.
At the time we had more than a six-month supply going into the 2013 season.
Ask me now, and I’m not so sure.
We still have too many peanuts. Thanks to foreign buyers, primarily China, the inventory is moving fast, nearly 50 percent more exports this winter than last winter.
Compared to corn, soybeans and wheat, peanuts are a small acreage crop. As such, when a buyer, like China, buys a large quantity in a short period of time, it can make a big dent in supply, and subsequently demand, and price; and it can amp these up in a big hurry.
One point of evidence is the Chinese purchase of pecans, an even smaller market than peanuts, but the impact on supply and demand could be similar for the two crops.
Everyone, without exception, I’ve talked to about peanuts over the past few weeks is urging growers to wait as long as they can to make decisions on how many acres of peanuts to plant. The big trump card in the waiting game is China and for growers who thought recent purchases by the Chinese was a one-time thing, think again.
One veteran peanut buyer says, “The Chinese keep coming back and coming back — they really like the price, quality and reliability of delivery of our peanuts. Now, we are faced with some interesting choices from growers all the way up to end-users.”
With shellers running full tilt, full time, the availability of shelled peanuts has become uncomfortably tight for some domestic buyers. One of those interesting choices has to do with China buying large quantities of farmer stock peanuts.
“Unless we start to see farmer stock being exported directly to China, the sheller's will likely offer farmers stock pricing based on where the market is now (March) and that probably will not be enough to make the farmers plant a lot of peanuts,” says veteran Stewart Parnell, former owner of Peanut Corporation of America, which was at the center of salmonella issues back in 2008 and 2009 and still faces charges based on that debacle.
Legal problems aside, Parnell remains an astute buyer of U.S. grown peanuts. He says, one thing that could change the price of peanut contracts is that he is getting inquiries on farmer stock from China now, but just don't know how best to manage or even work with that as it would cause a huge uproar by the shellers.
“I just don't think I would want to be a part of that,” Parnell says.
How much pressure Chinese buyers will put on domestic buyers to offer higher grower contracts remains to be seen. As planting time moves closer and closer the window of opportunity for peanut growers in the Southeast gets smaller and smaller.
If growers could count on another perfect growing season, like 2012, the decision to plant more peanuts would be much easier. Most irrigated peanuts last year topped 4,000 pounds per acre and 5,000 pounds per acre was very common under irrigation.
Even dryland peanuts in most areas of most states topped 4,000 pounds per acre. The Southeast averaged about two tons per acre in 2012.
Under irrigation, corn is a good option to peanuts. Dryland corn, even at $7 a bushel versus dryland peanuts that produce 4,000 pounds per acre is not such a good option, or hasn’t been in recent years.
Want access to the very latest in agriculture news each day? Subscribe to Southeast Farm Press Daily.
Dryland cotton on lighter, sandy soils has been an economic option to peanuts over the past few years, but similar economic uncertainties, based on what foreign buyers do or don’t do also plagues cotton growers. And, at 70-75 cents per acre, cotton may not be a better choice than two ton per acre peanuts, even at $400 per acre.
The sad truth is that growers in the Southeast who plant peanuts without a contract stand to make a lot of money, but they likewise stand to lose a little bit of money. For many, losing a little is more risky than making a lot.
When making the decision whether to roll those dice, the best advice is wait as long as you can to plant.
You might also like: