Peanut farmers are correct to be a bit more optimistic than they were at this time last year about their market, but the market can change quickly, however, for the better or worse. Patient marketing and a judicious eye to what may come in 2018 is advised.
“This time last year, we were looking at some extremely low contract offers simply because the industry was telling us that there was a tremendous supply of peanuts. Farmers took low contract offers because of a scare of not having enough storage for the peanuts. Naturally, farmers wanted to sell those peanuts but without the storage you couldn’t. … And when you get peanut prices below a profitability level, there’s just not much excitement out there for it,” said Ken Barton, executive director of the Florida Peanut Producers Association and peanut farmer in Holmes County, Fla.
“We now know there were some errors in reporting, and this year we have much less peanuts to deal with in the supply line,” Burton said, during an interview at the 2017 Alabama-Florida Peanut Trade show in Dothan, Ala., Feb. 9.
Note from editor: This is the first article of the “Managing the Margins: 2017,” series which will appear in Southeast Farm Press print and digital editions monthly (or more often as needed) to provide up-to-date information and strategies to manage the unique financial risks and opportunities associated with farming in the Southeast in 2017.
Early contracts for 2017 peanuts were offered at $500 per ton to a bit better for high-oleic varieties. Last year at this time, farmer stock peanuts were being offered $365 per ton or less.
“So, prices have significantly increased (compared to this time last year), and still with the somewhat robust export market, farmers are extremely optimistic that prices may continue to improve though prices have backed off a little from what they were earlier,” Barton said.
As you visited with the farmers at the trade show, you could get the sense the recent rally in the cotton market, pushing prices more firmly in the mid-70s, has also bolstered moods. “We’re in a better position moving into this land preparation and planting time for 2017,” Barton said.
Even with a tighter peanut market right now, one important thing growers need to think about is using better the Peanut Marketing Assistance Loan, said Marshall Lamb, director of the USDA National Peanut Laboratory.
“If you have a portion of your crop already contracted in at the $500, and I think you should have a portion of it, don’t hesitate to evaluate what the offer is at harvest, and if it’s decent take a little more,” Lamb said, during his presentation at the trade show. “But if it is not (decent at harvest), put your peanuts in the loan and let it carry you into the next crop year.