Wednesday, September 22, 2021

Carryforward Almost Gone As PB, Snacks Feed Families In Quarantine

J. Tyron spearman
J. Tyron Spearman
Contributing Editor

Stress in agriculture has never been greater. Two major hurricanes, Irma and Michael, quality problems and now germination issues, low commodity prices, COVID-19 pandemic, riots and unrest in cities, talk of food shortages, a devastating court ruling on a popular chemical product…the list seems endless.

The U.S. peanut market has remained quiet during the COVID-19 pandemic. There has been no panic in prices. The increase in prices for raw-shelled peanuts was caused mostly because of quality issues from the 2019 crop.

Aflatoxin reared its ugly head and clean, top-quality raw-shelled peanuts became a premium.

Shellers and production facilities set up COVID-19 precautions and kept delivering while protecting their employees. With consumers concerned about a food shortage, the peanut industry provided grocery stores and other food outlets with the peanut products they want and need.

The American peanut industry takes the responsibility of producing quality food products very seriously. The nation’s leading health, food and agriculture agencies were also working with industry to ensure a safe and stable food supply.


Congress and the U.S. Department of Agriculture, through the Farm Service Agency, started accepting applications from agricultural producers who have suffered losses. The Coronavirus Aid, Relief and Economic Security Act allocated $16 billion to provide vital financial assistance to producers of agricultural commodities who suffered a 5% or greater price decline due to COVID-19. Peanuts did not have a 5% or greater loss.

Other programs available included the Paycheck Protection Program and the Wildlife Habitat Incentive Program, which was mainly for farmers with storm or drought losses.

Acreage Estimate And Production

U.S. peanut production is forecast at 5.9 billion pounds (2,935,000 tons), up from 5.5 billion pounds in the 2019-2020 marketing year. Planted acreage intentions were up 7% to 1.5 million acres with the largest increase in Georgia. Some estimate that acreage could be up 15% to 20%.

Seed germination on later-shelled lots has been reported as problematic.
The U.S. average yield is projected to increase by 1% to 4,000 pounds per acre. Based on the peanut supply and slightly increased use, the carryforward is now estimated at 11% less or 828,000 farmer stock tons.

Contract Offers

Farmers wanted more than the $400 to $425 per ton for runners and $450 per ton on Virginias with shelled market prices at 45 cents per pound. Prices for cotton or corn were not exciting enough to be in competition for peanut acres.

Most farmer stock contracts were signed when raw-shelled prices jumped to 80 cents per pound. Farmers are hoping for a price improvement on uncontracted 2019 loan peanuts and 2020 uncontracted stocks. Offers will likely be impacted by the acreage report issued by USDA on June 30.

PLC Payment

Per USDA, the average price received by farmers for farmer stock peanuts averaged 20.6 cents per pound or $412 per ton in March. Prices in February were slightly lower at 20.5 cents per pound or $410 per ton. Prices have been the lowest in history this year with a low of $384 per ton in November to a high of $418 per ton in January.

The nine-month average is about $404 per ton. Farmers who signed up for the Price Loss Coverage program will receive a payment in October, the difference between the average price, now at $404, and the reference price of $535 per ton or $131 per ton.

The preliminary estimate from USDA is $125 per ton. This price would be applied to 85% of the peanut base tons on the farm.

U.S. Peanut Usage

June 3, 2020, peanut marketUse of raw-shelled peanuts in primary products in April 2020 was led by peanut butter up 12% versus April 2019 and up 5.5% for the year. The impact of the coronavirus pandemic’s call for families to stay at home has many grocery stores asking for more peanut butter.

The pandemic has led to more snacking, up 9.2% for the month and now up 5.4% for the year. Government purchases for nutrition programs in April totaled 1.173 million pounds of peanut butter, down 330% compared to same month last year. However, for the 9 months, government purchases are up 2.6% to 18.6 million pounds. Overall, usage is up 4%.

Export Peanut Usage

U.S. peanut exports are up 25.3% over an eight-month period and up 33% comparing March 2020 and 2019. In-shell peanut shipments to China totaled 5,939 metric tons in March and 61,000 metric tons for the year.

China is also buying raw-shelled peanuts, ranking third in shipments behind Canada and Mexico. Raw-shelled exports are up 4%, but peanut butter is down 9.4%.

Argentina is almost complete with peanut harvest estimated at 1.26 million metric tons. Officials report that quality is good, and yield should be 3,300 to 3,500 kilograms per hectare. Acreage is about 10% less than last season, and sound mature kernels are reduced likely because of smut.

In Brazil, production, distributed between the first and second crop, is estimated at 557,300 tons, 28.2% more than the last crop. With ethanol in crisis, sugarcane has given ground to peanuts.

Current Market

peanut gradingThe market today is at a standstill as demand is quiet for the time being. It appears that manufacturers are watching demand trends and are worried to put on more bookings for late summer in case demand slides.

Peanut butter companies are aware of consumption increases but don’t know how long it will last. They are taking a wait-and-see attitude. Raw goods are still priced in the low- to mi- 80s. Europe is in a similar situation as both Brazil and Argentina are offering into the European Union market, but buyers are quiet for the same reasons.

Officials are concerned about logistic problems in Brazil as the COVID virus is widespread and will affect shelling plants and moving goods to the port.

What Now?

More than 70% of producers are worried to some degree about coronavirus’ impact on their farm’s profitability. Over 60% said they expect farmers’ equity positions to decline over the next year. As the economy returns to a new normal, sales of peanut butter and peanut products should be at an all-time high.

Good news for everyone is that the old 2019 crop and the large carryforward are about gone. Stay healthy and safe, and have a good season.

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