What is in this article?:
• Over the next 12 months, the U.S. needs to increase imports, reduce export demand, reduce domestic demand, reduce crushings and, most importantly, increase plantings to replenish the 2012 crop.
• The manufacturers and shellers, unlike this past year, understand the imperative of competing with corn and cotton for acres.
AS PEANUT HARVEST began this year, a supply shortage appeared imminent heading into the 2012 crop year.
“Then you put them in rail cars and it takes 10 days or so to take them to the manufacturing facility. So 90 days is a reasonable number.
“Runner peanuts really drive the engine, and that number typically is below that average. Whenever we get over 150 days, prices plummet.”
The September USDA estimate indicates a 2.2 million ton demand and a 1.7 million ton supply, says Lovatt, so problems lie ahead.
According to supply and demand estimates, the U.S. will carry in 730,000 tons. “Assume we make 1,729,000 tons, and we’re making no quality adjustments — even though we’re beginning to see aflatoxin issues in the 2011 crop — and assuming all else is constant, we carry out 317,000 tons or 51 days of carry-out. That’s just not enough. It’s a model that’s unsustainable.”
Over the next 12 months, the U.S. needs to increase imports, reduce export demand, reduce domestic demand, reduce crushings and, most importantly, increase plantings to replenish the 2012 crop, says Lovatt.
It’s early in the game, he says, to start making estimates for the 2012 crop. One variable is imports.
“We don’t know what imports will do. Finding imports will be difficult because there’s a world shortage of peanuts. The countries we normally import from such as Argentina have Europeans begging for their peanuts, and those countries will be more consistent customers than the U.S.
“At this point, I’m guessing a carry-out of 98 days to transition comfortably into the new crop. This could be a catastrophe for peanuts. The price of medium runners from a year ago was 45 cents, and I’ve heard of some trading now for $1.26. Who knows where prices will go?”
Manufacturers already are in the process of increasing prices to consumers, he says. Jif has announced a price increase of 30 percent beginning in November, and Skippy and Peter Pan will follow. “Manufacturers are aggressively pursuing a course right now to ration demand,” he says.