A 20 percent increase in peanut acreage for 2008 should not produce a burdensome supply and producers will need to maintain acreage in 2009 to continue to meet domestic and export demands, says industry analyst Richard Barnhill.
Barnhill, with Mazur and Hockman, a contract commodity brokerage firm in Albany, Ga., speaking at the recent Southern Peanut Growers Conference in Panama City, Fla., said early estimates put the 2008 crop at 2.15 million tons.
Demand expectations are for 2.08 million tons with 1.4 million for the domestic market, 130,000 tons for seed, 125,000 to crush for oil and 425,000 for export.
Exports will be up some 20 percent. “China is not in the export market as heavy as before,” Barnhill said. “The United States and Argentina are the only options for Europe.”
And Argentina, which has started shelling the 2008 crop, is hampered by a transportation strike.
“Europe has been the big buyer in 2007 and 2008,” Barnhill said. “They are willing to pay premiums. Europe, Canada and Mexico show increased demand for U.S. peanuts. Exports should stay up.”
He said the weak U.S. dollar makes U.S. peanuts a bargain.
Barnhill said U.S. producers started the 2008 marketing year with a 1.815 million ton supply with a 585,000 ton carry-in, a 2.4 million ton crop, a 2.08 million ton demand, leaving a 320,000 ton carryout.
“That’s barely enough to get to the new crop,” Barnhill said. He said a 2.15 million ton crop from 2008 production and a 320,000 ton carry-in, less a 2.04 million ton demand, which is down about 2 percent, leaves a 430,000 ton carry-out to 2009.
He said snack nut and candy use are down slightly this year.
“This carryout is an increase of 120,000 tons over 2007,” he said. “But supplies are tight in 2008. A 2.15 million ton production will not be a problem.”
Barnhill said 2007 crop prices ranged from 40 cents to more than 80 cents per pound. “Offers now are limited as shellers sold to a comfortable level.” The market could soften with the new crop.
Barnhill said peanuts face competition for acreage from wheat, corn, grain sorghum and soybeans. “Planted acreage for 2009 will be a big question,” he said. “But we need to maintain production.”
He said a 1.43 million acre crop and a 3,000 pounds per acre yield would mean a 2.15 million ton crop and a comfortable carryout of 500,000 tons.
“The cost to make a crop also is a big factor,” Barnhill said.