Peanut growers on track to produce another big crop

From Southeastern Farm Press
By Brad Haire 
Farm Press Editorial Staff

If current estimates hold to harvest, U.S. peanut farmers this year will produce their second-largest peanut crop ever and another large carryover supply. At least there is something to be said about market stability. Here is a breakdown on what is forecast and what it could mean for the market.

According to USDA’s latest report, U.S. peanut farmers are in the process of planting 1.48 million acres this spring, about 10 percent more than last year. Georgia peanut farmers plan to plant 720,000 acres.

Right now, USDA puts yield estimate at 3,970 pounds per acre. If this holds, production will hit 2.9 million tons this year. This production is second only to the 2012 production, when farmers hit the bumper of all bumper crops, producing 3.35 million tons with 1.63 million acres, and inducing the hangover, or the supply carryover, still working through the market.

“Looking at these first supply and demand numbers, I see that prices will have a hard time going up anytime soon without some sort of short fall or shortage in production, which would be some sort of weather-related disaster," said Nathan Smith, farm economist with the University of Georgia Cooperative Extension.

"That being said, at least these numbers show we are staying consistent and avoiding big swings on the supply side as we look to maintain our current carryover into next year if we see a good cropping season this year,” said Smith.

Overall food use for peanuts is forecast to go up 3 percent to 3.1 billion pounds for the 2015-2016 marketing year. Peanut butter consumption is up 10 percent for the first seven months this year compared to last. Exports are up, too, or over 500,000 tons. USDA projects the current export trend will at least continue if not increase slightly.

“We’re getting some good use (consumption) numbers. But I don’t’ think we’ll see the kind of increase consumption to keep us from building more stocks. We are still looking at a 1 million to 1.2 million ton carryover with this crop. And looking at that size of a carryover could be the ‘new normal’ for the next couple of years,” Smith said.

Why more peanut acres in 2015? Nothing else was begging to be planted this year. Peanuts penciled out to provide the best cash flow for growers, mostly due to the Price Loss Coverage program under the new farm bill. Right now, the PLC payment is calculating to be $150 per base acre with a two-ton per acre payment yield, Smith said

But numbers are just numbers right now. The U.S. peanut crop has a long way to go. Only about a third of it was planted as of mid-May. Much can happen to the crop before harvest numbers start coming in October.

So far, the season has started off well for growers in Georgia.  “Early May has brought some very good weather for both planting and emergence.  We have had adequate rainfall and enough dry periods to get planting completed.  Ideally we will continue to keep getting some ample rainfall and ideal weather throughout the month of May,” said Wesley Porter, irrigation specialist with the UGA Extension.

Peanuts are the only oilseed crop likely to see a significant production increase this marketing year, according to the Farm Service Agency.  Peanut Farmers in India, China, and the United States are all eyeing good cropping years, pushing global production up an estimated 5% to 41.1 million tons.