States likely to set record-high yields this year include Florida, Georgia, Texas and possibly North Carolina.

“So we’re looking at a big carryover from this year’s crop, double that of last year. We’ll have slightly less than next year’s use just in carryover.

“Looking at peanuts in cold storage, it has gotten tighter this year than in 2011. From a stocks-to-use ratio, it’s the lowest level we’ve had in years at 500,000 tons. That’s a little over two months of supply, and they like to have at least three months of carryover.”

If the U.S. ends up with a 3 million ton crop compared to 1.8 million tons last year, and there’s an increase in total use of about 2 percent, then there will be about 1.2 million tons in carryover, says Smith.

“I think we’ll have some increase in use, so I’m forecasting about 10 percent increase in domestic use. With a 3,700-pound U.S. yield, we’ll have about a 1.1 million-ton carryover.”

Imports have doubled this year because of last year’s short crop, at about 150,000 tons, says Smith.  In a normal year, imports run at about 60,000 to 70,000. This led to prices increases for peanut butter and other peanut products, he says.

“We were looking good on use until they adjusted stocks-to-use processing numbers. On shelled edible use, we used about the same amount — 2 million tons — as the previous year for candy, peanut butter and snacks. Demand basically leveled off, with no growth for this past year.”

Exports are expected to increase some this year because of the lower value of the dollar, says Smith.

“The majority of our exports occur at Christmas and during the holidays.  Europe is our largest export market, followed by Canada, Mexico and Japan. Peanuts going to Canada and Mexico are being processed and brought back in as products. Peanuts are popular as gifts in Europe, so that’s our best time for exports.”

Peanut prices for 2011-2012 averaged 33 to 34 cents and rose to more than 36 cents at one point on weekly prices, he says.

“Early peanut contracts in the Southeast were $650 to $700 per ton. They came in a little too high, but they ended up at $550 to $600 per ton, although the number of tons that could be contracted was limited.”

The government’s peanut quota program, says Smith, was successful at controlling supply and keeping things level.

“After the end of the quota program, shelled prices adjusted to the market, and farmer stock prices went down to $355 to $380 per ton on contract.

“In 2003 and 2004, we had low production, so farmer stock prices got up to $400 per ton. Manufacturers were happy because shelled prices got down to 32 cents.

“Then, in 2007 and 2008, we had a bull run on soybeans and corn and we lost peanut acres. We had a shortfall in peanuts, with shelled prices reaching 80 cents per pound, and farmer stock prices reached $500 per ton in 2008.

“That caused us to over-produce, and prices went down to $350 to $400 per ton in 2009 and 2010, and that’s what I expect for this coming year, $380 to $400 per ton.”