One would describe the peanut market as quiet, very quiet. Buyers have booked enough peanuts to cover their needs for now, and most have withdrawn from the market waiting on a more accurate planted acreage number for 2021. Farmers must report planted acres by July 15.
The season start was slightly delayed with cooler-than-normal temperatures in many areas and flooding in some. The Virginia-Carolina region was cold and wet with the Southwest dry. Dry weather also covered some of the Southeast in May, and many farmers planted into dry soils with others waiting for the rain to drill in the peanut seed. Afternoon thundershowers started in early June, giving those remaining farmers sufficient soil moisture to finish planting.
Planting And Price
The U.S. Department of Agriculture increased its acreage estimate. Production is now forecast at 3.16 million tons, a 3% increase. Earlier estimates had acreage down 2%. The U.S. average yield is forecast at 4,050 pounds per acre, a 6.6% increase over 2020.
Market demand or disappearance totals 3.2 million tons, a 1% increase, making it 87,000 tons more than supply. Domestic food usage is forecast to be down 0.57%. Crushing for oil is up 3%, with exports remaining the same at 750,000 tons. Even with these changes, ending stocks will remain about the same as last season at 1.025 million tons.
Because of higher prices for competing commodities, shellers have been offering premiums to encourage farmers to plant peanuts and stay on rotation. With a base offer at $475 per ton for runners and $500 per ton for Virginia type, premiums included $25 for acreage under irrigation, $25 for high oleic varieties, $25 for seed production and even some hauling bonuses.
The increase in peanut prices will reduce the price loss coverage payment. USDA projects the program’s average price to be $415 per ton. Subtracting $415 per ton from the $535 per-ton reference price makes for a $120 per-ton payment on 85% of the farm base.
On the domestic side, peanut use is up 3.6%, with peanuts in candy up 10%, peanut snacks up 4.9% and peanut butter remaining on a positive, up 3.6%.
For manufacturers, the market is priced for a normal crop with forward prices at approximately 53 cents for splits, 54 to 55 cents for mediums and 56 cents for jumbo runners. A higher price is required for large kernel Virginias and for Spanish, which are in tight supply.
Buyers are taking a wait-and-see attitude towards planting but will keep a close watch on growing conditions. A lack of timely rains or other adverse weather affecting crop yield will cause prices to increase.
Remaining stocks for the 2020 crop are limited, and if one assumes about 80% of farmer stock has been contracted for new crop, we still have some negotiating to do at the buying point.
Nutritional Benefits Favor Peanuts
Nutrition facts from The Peanut Institute strongly support a great future for peanuts. A handful each day at 170 calories gives a person 19 vitamins and minerals, many important in the fight against heart disease.
An ounce of oil-roasted salted peanuts is an excellent source of niacin and manganese and a good source of fiber, phosphorus, vitamin E, folate, copper and magnesium. Peanuts contain about 8 grams of cholesterol-free plant protein per ounce — more than any other nut.
Whether the goal is to lose weight, enhance the nutritional quality of your diet or prevent the onset of disease, peanuts provide benefits to everyone.
China Still The Big Buyer
China continues to buy in-shell peanuts with 13,679 metric tons in March. For the export marketing year, China has purchased 145,582 metric tons. They are also buying raw-shelled peanuts and rank third behind Canada and Mexico. Raw-shelled shipments are down 15.8% and peanut butter is down 6.8%, but overall exports are up 8.8%.
In the European Union, the 25% tariff, along with testing procedures, continues to be the primary areas of concern. Officials are not optimistic about getting a deal done quickly to change the tariff situation. Trade relationships have deteriorated since March, when both sides agreed to pause the 17-year Boeing-Airbus dispute for four months.
Since then, Washington, D.C. has held firm against pleas from London and other allies to lift Trump’s metals tariffs. A spokesperson for office of U.S. Trade Representative had no update on a potential date for resumption of talks, and there is no indication that either side is willing to move on key issues.
An early frost in Argentina may have damaged the crop, although those still in the ground tend to be protected. Some Argentinian shellers have pulled back from the market until they get a clearer idea of the total crop size. Harvest has been in progress for about a month in this South American country but is behind normal because of delays at the start of the season. Pod maturity is also a concern.
Open For Business
Positive trends strongly indicate that the future is bright for peanuts and the peanut industry. New construction and upgrades to infrastructure are happening all across the industry. New growers, buying points and shellers are combining with the industry to build a profitable business.
A good growing season with a quality harvest that produces a profit would be everyone’s goal this year. It’s time to eat a handful of peanuts! PG