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.
Acreage increase seen for peanuts
University of Georgia budgets for irrigated crops show that corn is not as attractive as a $425 contract for peanuts, says Lamb. “Corn equates to a $400 peanut. Cotton is equal to about a $453 peanut, soybeans about a $427 peanut, and a wheat/soybean combination is as good as about a $466 peanut contract. Peanuts look like a more profitable crop to plant in 2014, and that’s why we’ll probably see an increase in acres in 2014, though the peanut supply/demand numbers are not looking favorable for a large acreage boost.”
Everyone seems to agree that there will be an increased planting of U.S. peanut acres this year, he adds, with the USDA’s March 31 Prospective Plantings Report estimating a nationwide increase of 29 percent, with a whopping 53 percent acreage increase in Georgia.
Peanut prices, averaged across the U.S., were fairly consistent during the time of the old quota system without much fluctuation, says Lamb. While prices dropped with a new farm bill, growers were provided with counter-cyclical payment if they had base.
“In 2010, we were at 23 per pounds or $460 per ton, and then 30 cents per pound in 2011 because of the Southeast drought. Going into 2012, contract offers were about $700 to $725 per acre. In 2013, the average price was about 26 cents per pound, and now the contracts are around $440 per ton to $425 for the conventional peanuts and about $475 for high-oleic peanuts.”
Supply and demand currently are impacting all crop prices in the U.S., says Lamb. “If we’re honest with ourselves, we knew when we were at $14 soybeans, $7 corn, and 90 cents to $1 cotton, that markets would not sustain that forever. Markets always correct themselves, and we’re going through an adjustment or correction cycle.”
Prices across the board peaked and then began dampening off, he says.
“The USDA stocks-to-use ratio shows that we’re in a world market, being affected by world markets or factors here at home. For example, with cotton, we’re looking at an 89 percent stocks-to-use ration in 2013-2014. A large majority of the stocks are now being physically held in warehouses in China. The big fear is what’ll happen to markets when they decide to dump these stocks. These are factors that are beyond our control as growers.”