What is in this article?:
- Peanut growers hold good hand, but caution advised
- Financing could be a problem
- 2011 was a good year overall
• The cards look good! Contracts in the Carolinas and Virginia are for $700 a ton for Virginia types and $650 a ton for runners, with a $25 premium for high oleic varieties.
• The big concern is that U.S. growers will plant a record number of acres of peanuts without having a contract in hand and turn the supply versus demand ratio from favorable for good peanut prices to one that will insure a return to low prices in future years.
THE 2012 PEANUT crop may be the most valuable in history.
2011 was a good year overall
Though the Southwest belt was devastated by drought last year, other production areas made up the slack, and overall, 2011 was a good year for peanut production in the U.S.
“In my years in the peanut business I’ve never seen a state average two tons of peanuts per acre. Last year Mississippi and Virginia did it.
“Granted, these are two of the smallest states acreage-wise, but it does indicate that the 2011 crop was far from a beltwide disaster,” Cotton says.
The veteran director of the Virginia growers association contends the peanut industry didn’t get into a shortage situation in one year.
In 2009, growers planted nearly a half million acres fewer peanuts than were planted in 2008. In 2010 acreage went back up by about 200,000 acres and yields were good.
However, a big percentage of the crop was plagued with quality problems, which knocked a high percentage out of the edible market.
“When you combine the production factors that go back to 2010, with another reduced acreage year (1,097,600 acres) in 2011, it explains how we got into our current situation of being short on peanuts and in a supply and demand position in which growers are looking at making a big profit on their peanuts. My advice is to growers is to be careful,” he says.
Tyron Spearman, who is recognized as one of the true gurus of peanut marketing, takes a little different approach than Cotton, but comes to the same conclusion: Be careful when you make the decision to go big time with peanut planting.
Spearman says there are currently (late January) about a three-month supply of peanuts in the pipeline.
If demand continues to go up, supply will get tight and prices will likely stay high. “Already we are seeing growers in south Florida looking at planting peanuts in February to have some to sell when the current supply is gone and before growers begin to harvest peanuts in the Southeast and Southwest belts. That’s not likely to work for a number of reasons,” Spearman says.
There are plenty of reasons to keep the peanut crop to about 1.3 million acres, or about a 13 percent increase across the peanut belt, Spearman says.
Overall, the cost of production may increase in 2012 by as much as 10 percent from last year. In some varieties seed costs may jump by 50 percent.
“La Niña has been in effect for the past two growing seasons, yet growers are able to increase yield in most cases. In reality, growers have never grown some of these new high yielding varieties under ideal growing conditions.
“If we have a good growing season weather wise and over-plant, we could see an unprecedented jump in production, which could put us right back in an over-supply situation,” he says.
“Right now prices are good, and maybe sustainable at or near the current level. Demand for peanut products is up, demand for U.S. grown peanuts in the export market is up, especially for in-shell peanuts.
“All systems seem to be go, but we don’t want to go too far too fast, Spearman warns.
Both peanut marketing specialists agree the key to sustainable profitability for the 2012 crop is don’t over-plant.
(For another look into the 2012 peanut outlook, visit http://southeastfarmpress.com/markets/peanut-prices-strong-2012-acreage-question. As for production advice, specialists are now advising peanut growers to plant at least a portion of their crop at an earlier date. For that information, visit http://southeastfarmpress.com/peanuts/peanut-growers-advised-plant-more-their-crop-april).