How high can it go? Farmers who have been asking this question about cotton prices in recent months are now asking the same thing about the USDA Weekly National Posted Price (NPP) for Peanuts, which was sitting at a remarkable $949.54 per ton for runners during the last week of June.

It’s an all-time high for the NPP, but does it mean anything?

Unlike other commodities, there’s not a futures market for peanuts because there’s not a large enough volume of trade, so pricing can be an inexact science.

The Farm Service Agency determines the NPP which the Commodity Credit Corporation (CCC) uses to set the repayment rate for loan peanuts, explains Nathan Smith, University of Georgia Extension economist. When the NPP falls below the national loan rate of $355 per ton, the NPP becomes the repayment rate.

“It’s not an actual price, but it’s likely based on current market conditions and indicators such as shelled prices, international bids and the weekly price report published by NASS. The actual formula is a ‘black box,’ meaning the formula is not made available to the public.

The rise of the NPP has been meteoric, beginning during October of 2010 from $450 per ton.

But just because the NPP is now $950 per ton, it doesn’t mean a grower can get a contract for that amount, says Smith.

“If the right events occur, we could actually get to that point,” he says. “But that price isn’t reflective of what growers can get right now. Considering the kind of start we’ve had to the season and the decrease in planted acres, we could get to that point.”

Reports from the field are that contracts for new 2011 crop peanuts remain at $600 per ton for Southeast runners. The $950 NPP and the $600 contract prices might be bookends for what market prices might be in the future, says Smith. One company has offered 80 cents per pound for shelled peanuts, and that also might be influencing the NPP.

Both buyers and sellers are remaining quiet until more is known about this year’s crop.

Shellers reportedly have offered farmers $750 per ton for peanuts remaining in the loan, plus they agree to pay the storage and handling. The Marketing Loan Assistance tonnage must be redeemed within nine months of placing the peanuts in the loan.