Cotton on heels of tight peanuts
U.S. peanuts clearly have dug their way out of a surplus. An ever-growing demand and tighter supply could spell better days ahead for peanut prices during the year.
That was one clear take-home message from the 2010 Oklahoma Peanut Expo in conjunction with the 65th annual Texas-Oklahoma Peanut Seed Quality Meeting at Quartz Mountain Resort at Lone Wolf., Okla. The other message was to watch cotton.
Lately, cotton prices have improved noticeably, and that makes cotton a real competitor for peanut acres.
• Burdensome U.S. peanut surplus has diminished over past year.
• Tight peanut supply outlook should mean some price improvement.
• Despite brighter picture for peanuts, cotton could compete for acres.
Tyron Spearman, who is executive secretary, National Peanut Buying Points Association, in Tifton, Ga., said in that No. 1 peanut-growing state, $450-per-ton peanuts will not compete with 80-cent-per-pound cotton, if the price of cotton should go that high or higher.
Growers there would need about $500 to $550 per ton for peanuts to be as attractive as cotton at that price, he noted. “If cotton goes up in price, expect more cotton in Georgia,” he said.
Supply already tighter
The U.S. peanut supply already has grown tighter, after a burdensome oversupply in recent years. Richard Barnhill, president of the Mazur & Hockman brokerage firm, at Albany, Ga., said the U.S. supply went from 2.41 million farmer stock tons in 2005 to just more than 1.84 million farmer stock tons in 2009.
At that time, he noted, the supply grew to about 2.57 million farmer stock tons after the record 2008 U.S. peanut harvest. But resurgence in demand since, and also the short 2009 crop, eventually brought that burdensome supply back to a more manageable level.
Total annual demand for U.S. peanuts now stands at about 2.08 million tons, from U.S. domestic use and exports.
The U.S. peanut carryout from the past 2009-crop year is 885,000 tons. “That’s still a few too many peanuts,” Barnhill said, who would prefer the carryover only to amount to 650,000 tons.
Peanut acreage prospects
Barnhill noted the 2010 peanut acreage will have a big say on peanut prices.
“If U.S. acres are over 1.15 million acres in 2010, then I see pressure on peanut prices,” he said. “But if U.S. peanut acreage is less than a million acres, then prices should improve.”
Barnhill said average peanut prices must do better than $450 per ton before acres increase. “China is the ‘big gorilla’ in the room,” he said. “But it’s very difficult to get information from China because of the way they do things.”
He said it is clear there’s a short Argentine peanut crop. And at the same time, Mexico has become a major buyer of U.S. peanuts. “The U.S. looks like the place to get peanuts,” Barnhill said.
Jack Simpson of Birdsong Peanuts, Brownfield, Texas, said the quality of the 2009 peanut crop was good, but he wants to see better crop insurance for peanuts. Determining the “true price” of peanuts has been one obstacle to that.
Mike Kubicek, executive secretary of the Oklahoma Peanut Commission, Shawnee, Okla., said the Southwest grows 100% of U.S. Spanish peanuts and 100% of Valencia peanuts, along with a big percentage of high-oleic runner peanuts, and some Virginia peanuts.
Kubicek notes it is an admirable accomplishment that the Texas and Oklahoma peanut seed industry leaders have come together annually for 65 years to meet and discuss peanut quality.
HE TOUTS SOUTHWEST: Mike Kubicek, executive secretary of the Oklahoma Peanut Commission, says the Southwest region now produces all the Spanish and Valencia peanuts in the U.S., with a sizable percentage of other peanuts, too.
This article published in the May, 2010 edition of THE FARMER-STOCKMAN.
All rights reserved. Copyright Farm Progress Cos. 2010.