Contributing Editor
The peanut industry continues in a wait-and-see mode as the startup of 2024 adds more unknowns to the market mix. Peanut producers and industry leaders agree that since cotton and corn prices were not as profitable, peanuts would likely save this season with favorable contracts.
As April rolled around, producers made their final decisions on how many acres to plant. Early on, soils were still cool and damp at the start of the planting window. In the Southeast and Virginia-Carolina area, an estimated 30% of acreage was planted by this time.
In early May, more rain came, sometimes four to six inches, and farmers had to put further planting on hold until the soil dried out. By May 15, another 30% of the acreage was planted. Then, another round of rains covered the heart of the Southeast peanut belt, bringing with it flooded fields, stuck equipment, water-logged seedlings and general poor conditions. Waiting is often an agonizing thing for a farmer when conditions are completely out of their control.
By June 1, the remaining 20% to 30% of acreage was yet to be planted.
Unfortunately, the Southwest remains under drought conditions.
Challenging Planting Window
Have we missed the window for optimum yields in 2024, especially in Georgia? That remains to be seen. Current crop buyers can come in and buy from the 2023 crop if needed. Their hope is that the market will weaken toward the new crop. Both buyers and shellers that wanted to do some business for 2025 coverage have done so, and now we wait and watch the weather. Current crop shelled peanuts are in the high $.60s to low $.70s, and new crop peanuts are in the high $.50s.
The market will likely remain firm with mediums at $.57 or so for the new crop.
The edible market may be less than the U.S. Department of Agriculture estimate. A new peanut warehouse lost its licensing from USDA, and what will happen to that tonnage is unknown. Will they reach the edible market?
Contract offers in the Southeast were above $500 to $525 per ton for runner-type peanuts and higher for Virginia varieties in the V-C region. Buying points reported heavy action, especially if a sheller/buying point pool was an option since there is the hope of a price increase later in the year.
Domestic Usage Declines
As a first estimate for the 2024 crop, USDA expects a 1% increase in harvested acres; however, the trade believes acreage will be higher. USDA estimates production at 6.34 million pounds or 3.17 million tons. The estimate on average yields is 4,000 pounds per acre, up from 3,742 pounds per acre on 1.58 million harvested acres.
Disappearance is estimated for domestic food, crush, exports and seed/residual at 3,080,500 tons. Surprisingly, this estimate calls for domestic food use to be up 1.2%. The USDA Farm Service Agency reports that peanut exports are up 33% for August through March. Ending stocks are now estimated at 1,136,000 tons. That is a good cushion to keep the market supplied with a constant supply of good quality U.S. peanuts.
The U.S. market for peanuts is showing a 3% decrease in usage. All categories are showing a decline, including peanut butter down .5% in the past nine months. Manufacturers experience the same economic conditions faced by peanut farmers, higher costs of production and inflation.
Movement On The Farm Bill
The Farm Bill is taking shape. The House Ag Committee’s Farm Bill makes targeted improvements for each commodity through increases to the statutory reference price and improving agriculture risk coverage for all commodities. The reference price for peanuts would be $630 per ton, up from $535 per ton.
Other changes are that producers would have an opportunity to add base acres to their farm, and farmers without access to Title I programs would be able to sign up. Marketing assistance loans are strengthened through increases in the loan rate for all commodities. The loan rate for peanuts would increase from $355 per ton to $390 per ton. Crop insurance coverage for producers would be expanded though the enhancement of area-wide coverage options, making insurance more affordable. Payment limits would also be increased to keep pace with inflation.
Chairman G.T. Thompson says that he does not expect the legislation to be considered on the House floor before September because of the busy appropriations schedule for the upcoming months.
On the Senate side, a general statement has been issued by Chairperson Stabenow. Senator Rev. Raphael Warnock (D-GA) proposed a Farm Bill framework that includes provisions from every piece of agriculture legislation introduced by the Senator since being sworn into office in 2021. The framework includes reference price increases of 5%, market assistance loan increases and additional base allocation.
Oh, SNAP, A Problem
Democrats and Republicans sparred over the main issue of funding for the total Farm Bill. The proposed legislation would draw on the Supplemental Nutrition Assistance Program, or SNAP, as a source of funds to cover commodity programs. Overall, 87% of the Farm Bill is the cost of SNAP. With a vote of 33-21, the House ag committee advanced its reauthorization of the Farm Bill. However, you would have thought that cold water was thrown into the faces of some legislators when the cutting of funding to SNAP, the old “food stamps,” was mentioned. Expect a fight on this topic in the future.
Overall, the Farm Bill is a long way from the finish line, and don’t be surprised if they move the goal posts again, such as into next year.
Meanwhile, peanut producers have enough to worry about production-wise, including weather, costs and the normal weeds, insects and diseases. For producers who have not contracted, there is no rush. You have time, and, hopefully, the market will come to you at a profitable level. Shellers and manufacturers want your peanuts and want you back next year.
