What is in this article?:
- Peanut Futures series: Oversupply not deterring more 2014 peanut planting
- Acreage increase seen for peanuts
- An oversupplied market isn't stopping Southeastern growers from planting more peanuts in 2014.
- The USDA’s March 31 Prospective Plantings Report estimates a nationwide peanut acreage increase of 29 percent, with a whopping 53 percent increase in Georgia.
PEANUT FUTURES, MARKETING for Profitability, an exclusive editorial series sponsored by DuPont Crop Protection, examines recent developments in U.S. and international peanut markets and helps prepare producers for what's to come in 2014.
Unlike other U.S. commodities, there is no cash or spot market or futures exchange for peanuts. This leaves few alternatives to growers for marketing their peanuts. For this reason, it is vital to the future of the peanut industry that new markets are continually developed and that established ones are expanded. To be successful, growers must be aware of the dynamics of this complex market. Peanut Futures: Marketing for Profitability, an exclusive editorial series sponsored by DuPont Crop Protection, will examine recent developments in U.S. and international peanut markets.
None of the Southeastern row crops has begged to be planted this spring, in terms of price, and peanuts are no different. But despite a supply and demand imbalance, Southeastern farmers still intend to plant significantly more peanuts in 2014 than in 2013.
“Peanuts, like corn, cotton and soybeans, aren’t really begging you to plant – they’re just playing alongside the other crops,” says Marshall Lamb, research director at the National Peanut Research Laboratory in Dawson, Ga., and advisor for the Farm Press Peanut Profitability Award.
For the past two years, markets have been somewhat oversupplied, says Lamb. Other crops, he says, are competing for land against peanuts, mainly corn, cotton and soybeans in the Southeast.
In past years, there was more of a clear choice as to which crop would be most profitable to plant, but market conditions are leveling the field more this year, he says.
One reason for this is increasing input costs, says Lamb.
According to grower data compiled by the Illinois Farm Business Management Association, the total cost of corn production in 2004-2006 was right at or just under $500 per acre. Currently, it costs from $815 to $831 per acre to grow corn in this area of the U.S.
“Some of it is related to input prices, from $172 up to $372,” says Lamb. “Those are just inflationary prices that you deal with on a daily basis. Also, there are land prices that have gone up from $140 per acre up to an average of $276 per acre in this area. A lot of those increases in land prices were the result of chasing high grain prices.”
Early on, growers’ variable costs were managed pretty well at the $2 to $2.50 range, he says, but because of increases in costs of production, break-even prices have exceeded $4.50 and are hovering around $4.30 to $4.65.
“Their only other option in many of these rotations is soybeans. Cost of production in this area was around the $300 mark, and now it’s up to the $550-mark. Inflationary factors on the inputs made them go up, but the primary increase was land cost. Now, soybeans need to break $10.50 to $11 per bushel to break even over variable costs. This will put the squeeze on many of these producers this year,” says Lamb.
Looking at commodity price trends from about 2009 and 2010 to the present, cotton prices were at about 49 cents average nationwide in 2009. In 2010, it went up to 71 cents, and in 2011, it was 92 cents.
“Some cotton contracted later in 2011 was bringing about $1.20 to $1.25 per pound. Since then, in 2012, it dropped back to 79 cents, and it’s down now to about 77 cents. It’s almost the same picture with corn, going from $3.50 in 2009, $5 in 2010, $6.22 in 2011, and right at $7 in 2012. And a lot of this was driven by the Midwest drought in 2012. Right now, we’re still sitting at approximately $4.50 per bushel for corn.”
Soybeans, in 2009, were at $9.50 per bushel, going steadily up to $14.50 per bushel in 2012. “This was a function of the Midwest drought and also because of factors in Brazil and Argentina,” says Lamb. “Since that peak, they’ve come down to about $11.50. Soybeans haven’t taken the dive percentage-wise that some of the other crops have taken.”