“I do expect consumption to go up because of the big crop, and the USDA is projecting food use to be up by 7 percent. I don’t know that we’re seeing that yet, but it’s the expectation.

“Exports are expected to be up 50 percent, the highest level of exports since 1995. And there’s a mention of interest from China wanting to buy peanuts this year. If that materializes, it would be good timing and an opportunity to take about 200,000 tons off of that total supply. Total use would be a record at 2.6 million tons.”

Shelled edible use isn’t yet showing that increase, says Smith, but it should pick up and be reflected in shelled use for candy, peanut butter and snacks. Mars reportedly is building a new plant to manufacture M&Ms and Snickers.

“In trying to project the 2013 season, starting out with the 2012 crop which is marketed through July 2013, we started out with about 500,000 tons of carryover and produced a 3.37-million ton crop, ending up with a supply of about 3.9 million tons.

“Total use was down last year because of the short crop, and they’re predicting about a 2.6-million-ton increase. That would leave us with ending stocks of 1.3 million tons. That’s an increase of more than 150 percent in carryover stocks.”

For 2013, if acres go down to 1.25 million with a trend-line yield of 3,520 pounds per acre, it would mean a crop of 2.2 million tons. In the past, that amount would be about equal to consumption, says Smith.

“But if we push up consumption to 2.6 million tons, that would draw down ending stocks by about 300,000 tons. Consumption, exports and crush would probably come down this next marketing year with a smaller crop.

“If acres go down to 1.1 million, it would mean a production of just below 2 million tons, and that would really draw us down in terms of carryover.

“Ending stocks would be down to 800,000 tons. If that happens, with a yield of about that size, we’d be back to $500-per-ton peanuts in just a year’s time or better.

“However, if the average yield is 3,650 pounds, that would bump us up another 100,000 tons in the 1.25 million acres scenario, and bump us up by another 75,000 tons on 1.1 million acres.”

Everyone knows that peanut acres will be low this year. How low will depend on what prices are offered, says Smith.