What is in this article?:
- Tightening supply spells trouble for U.S. peanut industry
- Reasonable number
- Acreage is anybody’s guess
• 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.
Acreage is anybody’s guess
For 2011, USDA estimated that U.S. growers planted 1,147,000 acres and will harvest 1,114,000 acres.
“How many acres we need for 2012 will depend on the estimated yields for 2012. But no matter what you guess, 1,114,000 acres will not be enough to satisfy demand in the 2012 crop.
We have to keep in mind that we’re not growing more acres. When we look at corn, cotton, peanuts and sorghum, in the peanut-producing states, it’s amazing how constant the acreage is. We’re dealing with 25 million acres of row crops. If we’re going to increase acres, we have to take it from somebody else.”
If the 1,114,000 harvested acres from this year are increased by 20 percent, and growers make 3,100 pounds per acre, they’ll make 2,072,000 million tons against a demand of 2,043,000 million tons, says Lovatt.
“So we just hold even and limp along. There’s no growth and we can’t export peanuts or grow domestic demand. Basically, we’ll have to increase acres by 100,000 to 200,000 acres next year, and we’ll do that by paying prices for farmer stock.
“People ask me what’ll we have to pay for farmer stock next year? I’ve heard guesses as high as $900 per ton and as low as $550. That lower number may be right if cotton goes to 60 cents and corn goes to $4, but I don’t think that’ll happen. A price of $900 will be too low if corn goes to $8. It’ll also depend on the price of cotton.”
Lovatt says there will be competition this time around. “The manufacturers and shellers, unlike this past year, understand the imperative of competing with corn and cotton for acres.”
The U.S. dollar index also will have a huge impact on commodity prices, he says. As the value of the dollar increases, the value of commodities decrease, and the value of crude oil will have an impact on production costs.
“We have daunting challenges ahead, but we’ll meet those. Peanuts are a terrific crop. They continue to provide healthy nutrition for people everywhere. We have to roll up our sleeves, get more acres planted, and weather this storm. It’s a shame we have to go through this, but we did it to ourselves.”