Farmers are ready to get back to work in the fields. Fortunately, the nature of farm work meant that it was able to continue through the pandemic mostly as normal. Both farmers and industry organizations are anxious to return to in-person meetings with fewer Zoom meetings.
Markets have remained relatively quiet as shellers continue to move peanuts from warehouses to shelling plants around the clock. Quality is good to excellent, unlike the 2019 crop that had to be cleaned and even blanched to meet aflatoxin requirements.
During the pandemic, demand for peanuts and peanut butter was significant and has remained strong as home-bound families have rediscovered the taste and nutrition of peanut butter.
The U.S. Department of Agriculture’s National Agriculture Statistics Service released their 2021 Prospective Plantings report and projects that growers will plant 1.63 million acres of peanuts. This would represent a 2% decrease from 2020’s 1.66 million acres.
Georgia is expected to plant 790,000 peanut acres, also a decrease of 2% from 2020. Using a five-year average yield of 3,934 pounds per acre and assuming normal conditions, this would result in a crop size of 3.08 million farmer-stock tons, close to last year’s production of 3.07 million tons.
Seven states project an acreage increase: Arkansas 15%; Alabama 3%; Florida 3%; Mississippi 9%; New Mexico 5%; North Carolina 2 %; and Oklahoma 13%.
Cotton, traditionally the biggest acreage competitor, is projected to be down less than 1%. Corn and soybeans are projected up 1% and 5%, respectively.
A Shortage Of Types
Some people in the industry have predicted a 3% to 5% decrease in peanut acres given last month’s bullish run up of cotton prices. However, cotton has come down since then, and the peanut market has been relatively unchanged during that same time.
All eyes will be on the weather this growing season, and the market will add and subtract from this planting report as we move forward.
Peanut prices for both current and new crop are near 50 cents per pound, depending on shipment position and customer specifications. It is extremely difficult, to downright impossible, to get offers on current crop large-kernel Virginia peanuts or in-shell Virginias as well as Spanish and Valencia types.
Farmer Contracts For 2021
In the Southeast, contracts are mostly at $475 per ton for runner-type peanuts. Each buying point has an allocation to be distributed to customers.
Premiums include an additional $25 per ton for seed production, $25 or $50 per ton for high oleic peanuts and $25 premium for the use of irrigation. Runner pools starting at $435 per ton with a July payment are expected.
In the Virginia-Carolina region and the Southwest, contracts are $520 per ton on Virginia type with limits and $510 per ton on Virginia type otherwise. Some areas have a $25 per-ton premium for irrigated crop. Runners are $475 per ton plus $25 for high oleic varieties, if seed are available. Additional premiums are offered to seed producers and for the use of irrigation.
The Coronavirus Food Assistance Program has announced a $20 per-acre payment for peanuts, and the Price Loss Coverage Program will net $80 to $85 per ton in October from last year’s low prices.
In winter seed testing, germination is reported good to excellent with most testing more than 80%. That’s good news considering the problems a couple years ago. Prices are about the same as last year at 85 to 86 cents per pound with discounts for cash at delivery or financing until harvest. Growers are being warned to avoid in-furrow fertilizer as tests show it reduces germination.
Peanut use for February was up 3.44%, yet the big increase we had been showing for the year went from 5.5% at the end of January to only 3.25% at the end of February. The USDA NASS explained that a major candy manufacturer revised its numbers from 2020, which is why the year-to-date numbers showed such a change.
Candy was showing a 25% increase for the year only one month ago, but because of the change, it is now showing an 8% increase. The good news is that we are still seeing strong growth from the major categories.
China continues to buy in-shell peanuts; however, a shortage has developed in world markets. In-shell peanut shipments totaled 22,207 metric tons in December increasing the six-month total to 117,488 metric tons. Total in-shells are up 84.9% for the six months. Raw-shelled shipments are down 20% and peanut butter is down 8.5%. Overall, exports are up almost 10%.
A 25% tariff in the European Union reduced shipments to the region. Then it was announced the tariff would be lifted for four months. This has yet to translate into any deals for runners with no firm transactions or bids reported. There are reports of European buyers looking to source U.S. Virginia in-shells, despite the high prices and good demand domestically.
In Argentina, reports are that cooler temperatures are delaying growth of their peanut crops, and another 15 to 20 days are needed for optimum crop maturity. Adequate rains will likely mean good yields for that country.
Trends in the peanut industry indicate that all segments are doing well. For the first time in years, growers had competition for the use of their land and that reflected in better contract offers. Peanut usage continues to increase as people continue snacking and looking for a nutritious option.
Buying points are upgrading and expanding as are shelling capacity with an increase in cooperative ventures. Manufacturers are releasing new products and expanding and increasing their footprint on the peanut world.
Welcome back. This is going to be a fun year.