U.S. peanut production for 2005 is forecast at a record-high 5.14 billion pounds, up 21 percent from last year's crop and up 24 percent from 2003. Area for harvest is expected to total 1.61 million acres, unchanged from June but up 16 percent from 2004.

Meanwhile, yields are expected to average a record-high 3,190 pounds per acre, 133 pounds per acre above last year. Planted acres, at 1.65 million, are unchanged from the June estimate but 15 percent above 2004.

Peanut pegging began the month of August at 32 percent complete, 11 points behind last year and nine points behind normal. At that time, only Oklahoma's crop was ahead of the normal pegging pace while Florida's crop trailed 17 points behind normal. The crop gained ground during the month but remained three points behind the normal pace.

On July 31, 88 percent of the crop had reached the pegging stage compared with 96 percent last year and 91 percent for the five-year average. Florida, Oklahoma, Texas, and Virginia were all ahead of the normal pegging pace, but Georgia's crop remained slightly behind normal while North Carolina's crop trailed the normal pace by more than a week.

In Alabama, where rain associated with tropical storm Cindy and Hurricane Dennis slowed crop development, pegging trailed nearly two weeks behind normal.

Production in the Southeast states — Alabama, Florida, Georgia and South Carolina — is expected to total 3.73 billion pounds, up 30 percent from last year's level. Yields in the four-state area are expected to average 3,065 per acre or 119 pounds above 2004.

Expected area for harvest, at 1.22 million acres, is unchanged from June but up 25 percent from 2004. As of July 31, peanuts pegging in Alabama, at 57 percent, and Florida, at 99 percent, exceeded the five-year averages by 26 percentage points and 9 percentage points, respectively.

In Georgia, peanuts pegging, at 94 percent, lagged the five-year average by one percentage point.

Virginia-North Carolina peanut production is forecast at 358 million pounds, down 22 percent from 2004. Yield is forecast at 3,193 pounds per acre, down 172 pounds from the previous year. Area for harvest is expected to total 112,000 acres, unchanged from June but down 18 percent from 2004.

As of July 31, 86 percent of the crop was pegging in Virginia and North Carolina, with Virginia exceeding their five-year average by eight percentage points but North Carolina lagging nine points behind.

Southwest production — New Mexico, Oklahoma, and Texas — is expected to total 1.06 million pounds, up 13 percent from 2004. Yields are expected to average 3,723 pounds per acre for the region or 434 pounds above last year's level. Record-high yields are expected in New Mexico and Texas, while in Oklahoma the forecasted yield would equal last year's record high.

The region's acreage for harvest, at 284,000 acres, is unchanged from June but down fractionally from 2004.

On July 31, peanuts pegging in Oklahoma, at 96 percent, and Texas, at 91 percent, exceeded the five-year averages by three and five percentage points, respectively.

While record yields and production usually are good news for producers, they could spell trouble in terms of marketing the 2005 crop, says Nathan Smith, University of Georgia Extension economist.

“The biggest issue facing the peanut industry is the oversupply this year’s crop will create,” says Smith. It’s expected that Georgia farmers will produce about 250,000 more tons of peanuts this year than they did last year, setting a state record.

Farmers planted more peanuts this year because prices were good last year, says Smith, and prices for other crops like cotton and soybeans are low. In addition, U.S. peanut consumption has increased by 17 percent in the past two years. However, exports have been down in recent years.

The United States, says Smith, could have a peanut surplus of up to 1 million tons to carry over into next year, about twice as much as it usually carries.

The oversupply, he adds, has already affected prices this year. Direct contracts between peanut shellers and farmers are few and are priced low. Contracts last year were about $400 per ton. Most of the peanut crop will have to go into the government-funded U.S. peanut program this year, which guarantees farmers $355 per ton.

And this year’s oversupply could cause even bigger problems next year, says Smith. “It’s going to create a storage problem for next year when warehouses are full and there is a need to store the 2006 crop. Unless we can move these peanuts in the export market, peanut prices could be even lower next year,” he says.

e-mail: phollis@primediabusiness.com