“With a production of more than 2 million tons, that’ll keep us at more than 1 million tons of carryover,” says Smith. “Exports will be down because China’s not in the market like they were last year. There’s positive news with domestic use, but overall use will be down mainly because of the decrease in exports.”

U.S. peanut acres have been in a downward trend over time, he says, and that’s a testament to increased productivity and higher yields.

“We’ve seen a lot of variability in U.S. peanut acreage since 2005, and the Southeast drives the acres. The Southwest has been in a downtrend, and we don’t expect that trend to change much. Arkansas came in and picked up some of that acreage. The Virginia-Carolinas region is fairly stable because they’re growing for a different market than the Southeast,” says Smith.

As Georgia adjusts its acres on a large scale, it is basically driving the U.S. acres, he adds. This past year, Georgia dropped its acres by about 41 percent, from 735,000 to 430,000. Alabama and Florida also dropped their acres by more than 35 percent.

“Overall, we had a 35-percent drop in U.S. peanut acres, from 1.6 million to just over 1 million, and the Southeast went down to about 745,000 acres.”

Estimating from the U.S. trend yield, Smith forecasts U.S. peanut yields for 2014 at about 3,775 pounds per acre.

While there was record peanut use this past year, it probably will come down this year because China isn’t expected to make the purchases it made in 2013, says Smith.

The bottom line, says Smith, is that there will be a large supply of U.S. peanuts. “At the end of June/July 2014, carryover is expected to be about 1.147 million tons. That could change as we see updated numbers in food use and exports, but that’s where USDA forecasts it right now. Food use is expected to be up by about 5 percent, driven mainly by candy and snacks and not peanut butter. If peanut butter use picks up, it would help us on the domestic side.”

Exports are down by about 35 percent, says Smith. “India has a big crop and prices are down, so they’ll be exporting their crop back into China again. China needed peanuts last year, and we had peanuts at a low price. Our prices are back to the same level as last year, but we haven’t seen any activity yet. Argentina has had some production problems, so hopefully we’ll pick up some exports to Europe.

“Our No. 1 destinations are Canada and Mexico, and we should see strong exports to those countries. Our peanuts go there and come back here as processed products. Overall, we’re looking at total use being about 2.4 million tons. We produced just over 2 million tons last year, so we’re still working down our carryover.”

Stocks-to-use has been positive - in double digits – says Smith. “Snacks are up by 12.6 percent but peanut butter use is down. Peanut butter is our largest category, usually making up about 50 percent of total use. Candy and snacks make up roughly 25 percent each of total use. There’s a 4.6 percent increase in edible kernels.

“With the carry-in, we’ll have a supply of 3.5 million tons and about 1.147 in carryover. If we’re looking at a 3,750-pound yield and a 10 percent increase in acres, it would give use about a 2.16 million-ton crop, which would bring us down to a carry-over of about 1 million tons.”

Growers have been offered $4.25 contracts, says Smith, and there also are some premiums for high-oleic peanuts. “The early contracts are being offered to see how many takers there will be. It probably means that $500 won’t be as likely, and that’s because of where prices are now with cotton and corn.”