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www.caes.uga.edu/departments/agecon/extension/agoutlook/. Peanut Situation & Outlook. Southern Outlook Conference Atlanta, GA September 22, 2008 Nathan B. Smith, Amanda R. Smith. Current Situation. Improved Production Prospects
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Peanut Situation & Outlook Southern Outlook Conference Atlanta, GA September 22, 2008 Nathan B. Smith, Amanda R. Smith
Current Situation • Improved Production Prospects • 2007 production 1.87 M tons, 8% higher than 2006. (Federal State Inspection Service shows 1.81 M tons inspected) • 2008 production estimate pegged at 2.38 million tons, 3rd largest on record if realized. • US Acreage is up 25% in 2008 • Stocks down from this time last year: • Farmer stock peanuts in storage are down 52%, • Shelled stocks are down 16%, • Roasting stock up 37% and • Oil stocks are up 18%. • Exports increasing, up ~60% from 2005. • Domestic food use projected to increase less than 1%.
Peanut Planted Acreages(1,000 acres) *Source: NASS Crop Production Report, Sept 12, 2008
Peanut Yields Source: NASS Crop Production various issues, *September Estimate
Total US Peanut Supply 2007 Estimate1.1% decrease in US acreage, 3,130 lb yield, 2.151 M tons use 2008 Forecast 25% acreage increase, 3181 lb yield, 2.260 M ton use
US Peanut Exports Exports = 18% of total disappearance in 2008
Impact of Fuel & Fertilizer Prices on Cost of Crop Production ($/acre) * Does not account for changes in technology.
Outlook • Current prices favor peanuts compared to cotton and corn (dryland). • Bumper crop will cause prices to back off of $500 per ton at harvest. • 2009 plantings will depend on contracts: • Growers are saying will take $600+ per ton price due to higher input costs, • However, growers will be tempted to grow, same or more peanuts if cotton does not rally, • Should consider the possibility of $355 per ton on non-contracted peanuts if have record crop.
2008 Farm BillSubtitle C - Peanuts • Peanuts were able to remain a separate title (distinguished from “covered commodities”) • Maintains a separate payment limit for peanuts • $40,000 Direct Payment Limit • $65,000 Counter-Cyclical Payment Limit • Direct Payment same at $36/ton • Target Price same at $495/ton • Advances and timing of DCP same as “covered commodities” • Payment level changes to 83.3% for 2009-2001
Peanut Market Assistance Loans • $355 National Loan Rate • 9 month loan beginning first day of the first month in which loan is made. • Marketing loan may be obtained thru: • FSA county office, • Designated Marketing Association, • or Cooperative Marketing Association
Marketing Loan Changes • Change in Storage, Handling and Associated Cost Rules • Handling and associated costs (other than storage) will be paid by the Secretary (CCC) incurred at the time peanuts are placed under loan to be repaid at redemption of peanut loan. • Pay for storage, handling, and other associated costs for all forfeited. • Adjustments of loan rates? “The Secretary may make appropriate adjustments in the loan rates for peanuts for differences in grade, type, quality, location, and other factors.”
USDA Proposal • White paper sent out to peanut industry proposing to adjust loan rates by type to reflect price differentials by type. • Based on NASS prices since 2005 would result in lowering the 2007 loan rate for runners from $355 to $348 per ton. • Also would raise virginia ($382) & spanish ($377) • Looking a phasing in the loan differentials beginning with 2009 crop.
Peanut Stewardship • Peanut eligible under new CSP program for stewardship payments for “adopting” a resource-conserving rotation (4-year?). • 5-year contract. • Originally proposed as PERS program for peanuts.
*Source: NASS Crop Production, Various Issues, UGA Preliminary Estimate
Cotton Peanuts Corn Soybeans Total Cost of Crop Production, 2002 and 2008 ($/acre)
