With the final production numbers in from the 2014 U.S. peanut crop, the big questions now are how many peanuts will be planted this year, and how will that acreage, along with the carryover from the previous year, affect the market?

The annual crop production summary released in January shows an average U.S. yield of 3,532 pounds per acre on about 1.325 million acres harvested, says Nathan Smith, Extension economist with the University of Georgia.

“The Georgia acreage estimate was bumped up to 600,000 acres with a yield of 4,100 pounds per acre,” said Smith at the recent Georgia Peanut Farm Show in Tifton.

Exports, he says, have remained strong, with the U.S. now considered the world’s low-cost producer of peanuts.

“That helps us, even though China hasn’t been buying peanuts from us as they were in the previous two years.

Georgia, Alabama and Florida continue to drive the amount of acres planted in the U.S., largely with the runner-type variety, says Smith.

Georgia and other peanut-producing states increased peanut acreage last year as relative prices of cotton, corn and soybeans fell, he says. Many growers returned to a more normal rotation of peanuts on farms that had shifted towards more corn in 2013.

“The passage of the 2014 Farm Bill and the $534 per-ton crop insurance projected price likely influenced some farmers to increase peanut acres acreage by looking for a safety net in the midst of lower prices. This was especially noticeable in the Southeast where areas had shifted peanut acres well below a normal for a rotation,” says Smith.

As for total U.S. planted acres in 2015, some are wondering if it’ll be somewhere between the 1.34 million acres in 2008 or the 1.638 million in 2012, he says.

“If you compare recent high acreages, Georgia had 750,000 in 2005, and we could be back over 700,000 in 2015. Florida and Alabama had 175,000 acres each last year,” says Smith.

When you compare production to use and carryover, 2014 has been balanced year, he says. “Production is at 2.6 million tons and use will be at about 2.6 million tons, so there’s not a big change in carryover at about 980,000 tons. That’s not a big difference from what we carried over in August of 2014 into this current crop marketing year.”

Domestic use – food use in particular – is up, says Smith, while exports are slightly less than the last two years but still very strong.

“So by the end of the marketing year we may be at about 2.6 million tons or maybe a little higher on total use of peanuts. We’re looking at some good indications for the first four months of shelled, edible use, driven mainly by peanut butter, about a 9.8 percent increase. If we continue that trend, we’ll probably continue to see numbers increase for use.”

The U.S. is now the low-cost producer in the world quality remains excellent, says Smith. “Even though China purchases from 2012 and 2013 are not showing up in 2014, we’re exporting more peanuts to Mexico, Canada and the European Union.”

What to expect in 2015

To begin projecting 2015, some assumptions for yield and harvested acres need to be made, says Smith.

“If we consider a 10 percent and 15 percent increase in planted acres respectively, these increased plantings lead to 1.44 and 1.5 million harvested acres. An average U.S. yield projection based on trend would be 3,850 pounds per acre. The projected size of the 2015 crop would be 2.77 million tons and 2.89 million tons, respectively. If total peanut use rises by 2.22 percent, then the carryover would grow to 1.15 million tons in the 10 percent increase scenario. A 15 percent increase in planted acres would add another 125,000 tons to carryover. Both of these scenarios would limit peanuts to around $400 per ton or less.

“On the high side, if we had a yield of about 4,050 pounds per acre and an acreage increase of 25 percent, that gives us more than 1.63 million acres harvested. That would be more than the highest planted acres we had in 2005. That certainly would put us in a loan-rate scenario in terms of prices. I feel like we’ll be in the middle in terms of acreage increases for 2015. Early contracts were offered at $400 per ton, and they probably won’t go much higher until planting intentions become clearer.

“We don’t know yet if there will be a premium on high-oleic peanuts. I wouldn’t expect a $50 premium like last year; maybe $25, if there is one at all. Peanut prices will be impacted by what growers do as far as planting on the generic base acres. As a starting pointing, I’d look at a 15 percent increase in the U.S. and about 20 percent in Georgia. Different regions will be higher than 20 percent and others will be lower, depending on rotations and other factors.”

The decision to plant peanuts is pretty straight-forward as far as the Farm Bill goes, says Smith. PLC or price loss coverage will show as higher than net payments. Looking at average seasonal prices of the 2014 crop, it’s about $430 per ton. That would be a $105 per ton payment rate. In 2015, I upped that another $15 to $120.”

Looking at crop budgets for 2015 indicates that more peanuts probably will be planted, says Smith, and probably more soybeans followed by cotton.

With inputs from various crop specialists at the University of Georgia, this is how Smith sees acreages for 2015: Cotton – 1.25 million; peanuts – 725,000; corn – 330,000; soybeans – 325,000; wheat – 320,000; grain sorghum – 50,000; and tobacco – 12,000.

“The wheat seedings report shows Georgia at about 320,000 acres, but I think some of that is cover crop due to the lack of rye seed available. With the incentive to plant more peanuts, I encourage growers not to overplant because that will bring down prices. Your payment limit will come a lot quicker on a few acres and keep in mind the importance of rotation.”