How many acres of peanuts will be planted in the United States and in the biggest state, Georgia? That’s what the market wants to know. With 50% of production coming from the Peach State, a 10% acreage increase is significant. It is hard to chase a market you can’t catch.
The acreage planting mix is a decision influenced by items such as contract offers from local buying points and shellers, cost of production, prices and costs of competing crops, working equipment, farm labor, availability of chemicals and even seed costs and availability. After a 10% reduction last year, farmers are coming off a good year in 2022 with positive thoughts.
Looking ahead, farmers know an increase in costs of production is certain. So, they are looking for more this year. The current crop market is still very firm with prices in the low 60 cents per pound. Prices seem to have been buoyed by strong demand at home, and by a questionable South American crop outcome, the usual source for the European Union’s peanut-buying interests.
New crop is still trading minimally, and 2023 contracting in all regions for farmer stock has not picked up. Once again, buyers’ ideas are in the mid 50 cents per pound. Things could still change before planting, so farmers have not rushed to buying points to sign up.
Adding to the marketing mixture are grower cooperatives. Growers plant a required number of acres as quota to cover cooperative stock. Estimating acres above co-op stock is not easy. Some industry experts estimate co-op designated planting could be as high as 800,000 acres.
Options And Decisions
Most shellers have offered $525 per ton for runner-type peanuts, $525 per ton for the high-oleic oil varieties and $555 per ton on Virginia-type peanuts. Some shellers are offering a sheller pool with a $500 per-ton floor.
Buyers continue to point to cotton at 80 cents per pound as a reason peanut should see acreage increases and falling prices for raw-shelled kernels. However, one survey has cotton acreage estimated down 17%. The option is $535 per-ton peanuts versus 80 cents per-pound cotton. It’s decision time.
Higher Reference Price
The Price Loss Coverage program will not have a payout in October because the average price of peanuts paid to farmers was above the $535 per-ton reference price. The U.S. Peanut Federation has made increasing the reference price a top priority in the new Farm Bill.
One sheller recently announced a payout of $22 per ton, over and above contracts and other premiums from seed or irrigation. A new ReGeneration cover crop program may net the farmer another $10 per acre.
Seed cost is only a penny more than last year. Certified Georgia-06G is 84 cents per pound and registered seed is quoted at 86 cents per pound. Farmers paying on fall terms are priced at 87 cents per pound for certified and 89 cents per pound for registered seed.
Just when the trade thought demand was slipping, Peanut Stocks and Processing makes a major adjustment. Candy usage was down 36% last month and is now up 3.8% for the month. The raw peanut usage in primary products is suddenly changed from down 2.3% to down only 0.6%.
Peanut butter continues to show a growing, strong market, up 4.4% for the seven-month marketing year. In-shells are on a roll, up 11.8% during the same period. The good news for peanuts is that all categories — candy, snacks, PB and in-shells — are all positive in February compared to February 2022.
Markets are also positive for peanut exports. A delegation of shellers, growers and technical consultants visited ports in Hamburg and Rotterdam to observe the testing process first-hand and identify steps toward reducing the 20% inspection rate.
Import markets are concerned about origin from Argentina and Brazil. Peanuts in Argentina suffered great stress because of drought, very high temperatures and the aftermath of a frost on Feb. 18.
European Union buyers have swarmed U.S. shellers in the past few weeks, buying up significant quantities of the 2022 crop’s shelled goods for April to December delivery. If this trend remains, we could see the current crop market firm up from its current level of 63 cents per pound, and it could influence farmer-stock contracts.
Exports of peanuts continue to increase in Mexico and Canada, up 7.17% and 4.11%, respectively. A major change is the decline of China, down 40% from the previous year. Japan showed a 22% increase in exports with a 4.24% market share.
Things are looking good for peanuts. Now, we need to work toward keeping the peanut program in the Farm Bill, and hopefully increasing the reference price, so that farmers have some type of safety net in the future.