What is in this article?:
- Chinese peanut buying spree quickly changing industry dynamics
- Domestic buyers coming back
- Doesn’t feel like huge over-supply
• 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.
Domestic buyers coming back
Now, domestic buyers are coming back to shellers to buy another three month supply, but shellers are working seven days a week to get enough peanuts ready to meet the renewed export demand.
The rapid demand for peanuts has created a backlog in blanching — the process that removes the skin from peanut kernels.
“We need to get these peanuts shipped overseas in the winter months. It’s a lot easier to ship in cool weather, because in hot weather peanuts sweat in containers and quality can go down,” Spearman says.
So, shellers are going full tilt trying to fill these export orders, which keep getting bigger and bigger.
“If this export frenzy continues, and we move a large amount of peanuts prior to planting time, we could see the current plans to cut acreage change dramatically,” he adds.
One hold up to the supply-demand issues facing peanut growers is the domestic market. Manufacturers are still using some of the high priced peanuts, even when blended with cheaper peanuts, it’s pushed their production costs up. Subsequently, the price of peanut products has gone up and demand for these higher priced products has gone down.
“Peanut butter, the staple for U.S. peanuts remains in good demand, but other peanut-containing products have taken a big hit in the market place. Getting this domestic market booming again is critical to cuting back the over-supply of peanuts that we currently have storage.
“As manufacturers get into cheaper peanuts from the 2012 crop, the price of peanut products should go down. However, they were buying jumbo peanuts a few weeks ago for 46 cents a pound. After the Chinese-driven export market made a big move to buy U.S. peanuts, the price of jumbos to the domestic market went up two cents a pound,” Spearman says.
“We’re sitting on a million ton surplus, but when countries like China come in and buy in big bulk orders, that’s not such a big cushion for domestic buyers, and the supply and price can change quickly,” he adds.
“Last year China bought 40 percent of the U.S. pecan crop and really turned the market around — significantly increasing pecan prices in the U.S. If they decide to buy in big enough volume they could do the same thing with the peanut market,” Spearman says.