U.S. peanut acreage took a dive last year pushing supply down and harvest-time prices high for growers. Farmers will plant more peanuts in 2012 than last year. But will they plant too much and bust what is for now a healthy market, at least price wise?
According to the USDA's Prospective Planting report released in late March, U.S. growers intend to plant 25% more peanuts this year. In Georgia, which produces roughly half of the U.S. crop each year, growers intend to plant 20% more. The report is based on farmers surveys conducted in early March.
Early guess in the industry figured the U.S. would hit maybe 1.38 million to 1.39 million acres this year. The report pegs it now at 1.42 million acres.
U.S. Peanut Acreage Swings Back High After Low 2011
"We knew we'd have more acreage this year but this intention has come in a bit higher than what was expected. And this acreage should be plenty to build back up the supply as far as what is in the pipeline and what we carryover from marketing year to marketing year," said Nathan Smith, peanut economist with the University of Georgia Cooperative Extension.
Georgia's acreage reflects a return to a more typical crop rotation pattern for the state and isn't a big surprise. But the increase in other states is. Mississippi growers plan to plant 50,000 acres, or three times what was planted in the state last year. "I wonder if the Mississippi estimate is inflated some to account for Arkansas planting between 15,000 and 20,000 acres, which is not shown in the intentions report yet. (Arkansas) should be an official peanut state soon," he said.
South Carolina will go 105,000 acres, or 36% more than last year and Virginia with 23,000 acres will be 44% higher.
Using a trend-line average yield for the country, maybe 3,350 pounds per acre, if the 1.44 million acres are planted, growers will produced 2.33 million tons this year. Sticking with current usage demand, this would raise carryover from 440,000 tons to 625,000 tons into the 2013 marketing year. The industry now indicates it prefers a 500,000-ton carryover each year.
"So, at this point we may have some downward pressure on prices if we get this acreage. Right now, it appears that spring planting prices will likely be the highest for this year," he said.
Much of east Alabama, southwest Georgia and north Florida, the hub of U.S. peanut production, was in severe drought at planting time and had little hope of relief this growing season. This will weigh heavy on yield potential. But timely rains in the past have pulled fields through. The newer, higher-yielding varieties have surprised farmers and farm specialists in the past few years, pushing through some adverse conditions to produce strong yields, some record-setting, Smith said.
USDA's final planting report will be released June 29.