A record 2012 U.S. peanut crop had the industry worried about a huge carryover that would depress prices.

But, say peanut organization officials, strong demand — particularly unexpected demand from China — has helped brighten the picture considerably.

“What’s exciting is that, in a year when we need to sell more peanuts than we ever have before, the Chinese have come into the U.S. market and are buying quantities of peanuts that I would’ve never imagined in my lifetime,” says Bob Parker, the new president and chief executive officer of the National Peanut Board.

“Part of this is being driven by supply issues that occurred as a result of crop problems in India, reducing their ability to export to China. And we’re hoping the U.S. will be able to retain part of the huge Chinese market for peanuts,” he said at the annual meeting of the Mississippi Peanut Growers Association at Hattiesburg.

“We have a record crop from 2012 — a very high quality crop — and this unexpected demand from China will help us find a market for a lot of these excellent U.S. peanuts.”

Parker says he’s “excited about this opportunity to serve the National Peanut Board and America’s peanut farmers. As I look at our plan of work for 2013, it becomes apparent that our overriding mission needs to be centered around improving grower economics — selling more peanuts so growers can get more money, and focusing on production research so they can become more efficient, make higher yields, and reduce input costs.

“These are the factors we’re going to look at with each program we embark on.”

Malcolm Broome, executive director of the Mississippi grower organization, says last year’s crop across the U.S. “was the best in our industry’s history.

Outstanding state yield

“Mississippi had a 4,400 pound yield average, which is outstanding. We’d been leading the industry in yields since we became a member of the national peanut organization, but Georgia edged us into the No. 2 position in 2012 with a 4,550 pound average.

“We had ideal growing season weather in Mississippi, and a widely-planted new variety, GA06, yielded really well.”

The 2011 crop shortage as a result of Texas’ extreme drought resulted in a nationwide shortage that pushed up 2012 contract prices — as much as $1,000 per acre — and resulted in widespread acreage increases across the peanut belt.

“We got a bumper crop on more acres, which resulted in a surplus of peanuts, and that will affect the industry in the months ahead.”  But, Broome says, “China’s purchases have certainly been welcome to help reduce that surplus.

“We would normally would expect to have some peanut contracts on offer by this time in the year, but at this point there are none. We know our growers will be facing a lower price for 2013 peanuts, but hopefully there will be a price that will offer them a profit potential — particularly in situations of peanuts versus dryland corn or maybe even dryland soybeans and cotton.

“There’s no doubt Mississippi acreage will be down from last year, but this may be an opportunity for those who don’t have irrigation to rotate out of peanuts. We’re we’ll have a decent crop year, and there are plenty of peanuts to carry us through the year.”

One benefit of the large supply, Broome says, is that “consumers ought to be seeing cheaper prices for peanut butter and other peanut products in the supermarkets.

“We’re still excited that peanut production will stay in Mississippi and we look for it to continue to grow in the years ahead. We had around 48,000 acres last year, but our average acreage is only around 20,000, and I would think we will certainly be above that.”

Marshall Lamb, research leader for the USDA/ARS National Peanut Laboratory at Dawson, Ga., says the peanut market this year “is drastically different from last year. In 2012, we were under-supplied because of the drought-shortened 2011 crop and we needed a significant increase in acreage and production.

“We did increase acreage somewhat in 2012, but the big increase in production was a result of historically high yields — just over 4,100 pounds — which gave us an unprecedented production total of almost 3.2 million farmer stock tons.

Acreage reduction still needed

“China has helped alleviate the surplus, but we will need a reduction in acres in 2013 to get supply back in balance with demand.”

With fewer peanut acres needed this year, some growers will use the cutbacks as an opportunity for rotation to non-legume crops. Don Self, Mississippi’s delegate to the National Peanut Board and a producer in Monroe County, Miss., says “If we don’t have a contract by March, we’ll cut way back on our peanuts to probably less than a third of last year’s acreage. That’s pretty much in line with what Marshall Lamb has said, that 35 percent would be a good number for growers to back off on acres.

“Everyone I’ve talked to feels things aren’t really favorable for a very good contract price this year, so this may be a good opportunity for us to back off and plant more some alternate crops — corn, cotton, or grain sorghum — and that’s what we’re planning to do at this point.”

 “We planted our entire acreage in peanuts last year. That was somewhat against my rule of thumb of adhering to a strict one-third rotation program, but for that kind of price we felt we could make a one-year exception.”

Self says peanut yields on his farm last year varied widely. “Because of late season leafspot, we wound up averaging about 4,200 pounds. We had some fields that picked over 6,000 pounds, while others that were devastated by the leaf spot had really low yields.

The rains we got during the season were very helpful, though and we were really pleased with our yields.”

Joe Morgan, president of the Mississippi Peanut Growers Association, who farms with his son Joe Jr. just south of Hattiesburg, says “With both cotton and peanut prices expected to be down this year due to surpluses, we’re planning to plant 750 acres of corn – the most we’ve had in a long time, and about all the land we have under center pivots.

“We’ll drop back from the near 1,250 acres of peanuts we had last year to about 800 acres this time. Even when peanut prices are down, with good yields they still have a good profit potential.

“At this point,” Morgan says, “our plans for cotton are up in the air. We’ll just have to see how things go as we get a bit farther into the season. It could be that we’ll try double-cropping some of our wheat ground with cotton, or maybe we’ll plant some milo.”

The Morgans were winner of the top award in the association’s yield contest in the 800 acres and above category, with a 5,600 pound average for 2012.

“We’ve had consistently high yields the last three years, thanks to good weather and better-performing varieties,” Morgan says. “We planted 895 acres in 2010, with a 5,086 pound average, 835 acres in 2011, with a 5,077 pound average, and 1,244 acres in 2012, which produced our highest average ever.”

hbrandon@farmpress.com