U.S. peanut farmers produced more than 3 million tons of peanuts in 2012, a record. That production plus carryover supply from 2011 means the industry has plenty of peanuts to make peanut butter and peanut-based snacks well in into 2013. But the country will still need farmers to plant peanuts in 2013. But it will be a tricky marketing year.
"We certainly can't go a year without planting peanuts. … And with the glut of peanuts, I do anticipate use (consumption) to be up this year," said Nathan Smith, peanut economist with the University of Georgia Cooperative Extension.
Peanut acres down
The industry will likely need 1 million tons of peanut to meet demand in 2013, combined with the large carryover from the 2012 crop. This means growers need to plant around 1 million acres in 2013. Using average, or trend-line, yields, 1 million acres might produce 1.8 million tons of peanuts in 2013. The country uses and exports roughly 2.1 million to 2.2 million annually and likes to carryover at least 500,000 tons into the next season to insure supply continuation.
What does this mean? The lowest U.S. peanut acreage ever was in 2009 when farmers planted 1.1 million acres. "We're at risk of going to a million (acres) or below with the amount of peanuts we have now," he said.
What price is it going to take to get peanuts planted in 2013?
Growers should try to get prices to average $450 per ton for peanuts in 2013. Consider how much of your production that price covers. Contracts last year came out for partial, or for only part, of a farmer's planted acres. Extra production would fall at best to the federal loan rate of $355 per ton. Growers need to average out their contracted and noncontracted production to get their total net return on any acreage they plant in 2013.
Will prices improve as the 2013 season progresses? Don't count on it. With the 2012 production still looming big, industry leaders agree it will take a year or two to work through the current glut.