What is in this article?:
• Domestic buyers have waited out the pricing game, hoping to buy cheap peanuts from the government loan program, but as they waited the export market stepped in to deliver a much needed charge into the peanut business.
• The primary reason U.S. peanut exports are up by 51 percent versus this time last year is China.
TYRON SPEARMAN, Georgia-based peanut marketing expert, tells South Carolina peanut growers to push peanut consumption and watch export markets.
A huge over-supply of U.S. grown peanuts is being stored in some strange places and has left growers wondering how few peanuts they should grow this year.
Recent record movement of peanuts out of storage and to shellers may influence growers to plant more acres than experts are currently predicting.
Domestic buyers have waited out the pricing game, hoping to buy cheap peanuts from the government loan program, but as they waited the export market stepped in to deliver a much needed charge into the peanut business.
The primary reason U.S. peanut exports are up by 51 percent versus this time last year is China. The Asian economic giant traditionally buys peanuts from India. They typically buy mixed quality peanuts and use cheap labor to sort these peanuts in a process called hand-picked selects. In this process, China picks the highest quality peanuts for the edible market and crushes the rest for oil.
With the price of U.S. peanuts down on the world market, the Chinese have found they can buy higher quality peanuts and use these for edible markets, without going through the time-consuming and costly hand selection process. The remainder of the peanuts can be crushed for oil.
Peanut oil is in big demand for cooking purposes in China, and though the Chinese grow about 13 million acres of peanuts, demand far exceeds supply from the Chinese domestic supply.
To overcome the poor quality of peanuts from India and other countries, China began looking for a higher quality supply and have opened a peanut buying office in California, set up to buy U.S. grown peanuts.
“China is coming to the U.S. peanut market in a big way. They are able to pre-pay for their purchases and are likely to open additional offices to buy more peanuts,” says long-time peanut marketing expert Tyron Spearman.
In one recent buy a Chinese buyer purchased 100 loads, or about 400,000 pounds of U.S. peanuts and paid for them before the peanuts were delivered. It won’t take many such buys to reduce our surplus in a quick hurry, Spearman says.
(To see what Mississippi peanut growers were told about the situation at their annual meeting, and what to do about planting intentions, see China's surprise purchases help ease pressure of huge peanut crop).