Peanut farmers enter uncharted territoryPeanut farmers enter uncharted territory
Nationally, there is enough warehouse space certified by the Commodity Credit Corporation to hold about 3.77 million tons of peanuts. If expected 2017 production is fully realized it will be about 120,000 tons more than current warehouse capacity.
October 9, 2017
Peanut farmers individually might not have known it at planting time, but collectively they were entering uncharted territory.
If September USDA projections hold true, U.S. peanut farmers planted close to 1.9 million acres this spring, 13 percent more than last year. Projected average U.S. yield is pegged at 4,254 pounds per acre, or 43 pounds per acre more than the previous national yield average set in 2012, which totaled 3.38 million tons and was the high-water mark for U.S. production until this year. Later this week, USDA will update projected production with its October report.
Georgia farmers, who annually produce about half of the country’s peanut crop, according to September’s USDA report, will average a record yield of 4,700 pounds per acre, which would be 20 percent more than last year’s average yield.
(Editor’s Note at 11 p.m. – This version of the story updates minor typos from previous version posted noon Oct. 9.)
Most Georgia peanut experts on the 2017 Georgia Peanut Tour, which took place mid-September, said weather and harvest will have to go perfect for farmers to realize that massive record yield. Some felt a more-realistic average yield for Georgia will fall between 4,300 to 4,500 pounds per acre. Either way, the state’s peanut crop is expected to be strong at 1.95 million tons, or 40 percent more than last year.
“I’d say a majority of our crop still has three to four weeks to go (before harvest). It depends on what Mother Nature throws at us to where we are going to end up,” said Scott Monfort, University of Georgia peanut agronomist, during the 2017 Georgia Peanut Tour Sept. 18.
“When we started this year, we told our growers that we are in uncharted territory,” Monfort said.
During the Georgia Peanut Tour, Monfort provided some examples to illustrate his point:
With the 2017 crop, Georgia farmers entered their third straight year with more than 700,000 acres of peanuts planted. They haven’t had that many consecutive years of high acres in recent memory, and it has squeezed crop rotation, setting up issues with diseases and insects.
Last year, Georgia had a hot, dry summer and harvest, which put stress on the 2017 seed supply. Not bad but some issues with vigor for this year’s crop happened early on;
Fall and winter was unusually hot and dry; extremely so. Georgia peanut counties, like many in the Deep South, received only a handful of days with freezing or even near-freezing temperatures, again, setting up insect and disease issues;
The weather also made the 2017 peanut planting season different. Optimal soil temperatures for planting were widely available for early spring planting, which in Georgia ran from mid-March to July 5, one of the longest planting seasons in recent memory.
Since 2012, U.S. peanut average yields have been trending down, shedding about 500 pounds per acre in the last four years. The U.S. peanut supply was down heading into 2017. This year reverses that dive dramatically.
Numbers from the rest of the country’s peanut belt are impressive. For example in:
Mississippi, 2017 average yield is predicted to be 4,500 pounds per acre, or 10 percent more than last year;
North Carolina, the average yield is predicted to be 4,100 pounds per acre, or almost 20 percent more than last year;
South Carolina, the average yield is predicted to be near two tons per acre, or 18 percent more than last year;
Texas, the average yield is predicted to be 3,600 pounds per acre, or 28 percent more than last year;
Virginia, the average yield is predicted to be 4,300 pounds per acre, or 16 percent more than last year.
The industry needed and wanted more peanuts this year, but the supply from 2017, now predicted to push 3.9 million tons, or near 40 percent more than 2016, could be a warehouse buster, said Adam Rabinowitz, UGA Extension economist, at the 2017 Southern Outlook Conference Sept. 27.
Nationally, there is enough warehouse space certified by the Commodity Credit Corporation to hold about 3.77 million tons of peanuts. If expected 2017 production is fully realized, it will be about 120,000 tons more than current warehouse capacity, but that doesn’t mean this new-era bumper crop won’t have a home to be stored. Some regions might have excess capacity, while the capacity for storage in some locations will be tight.
Reports point to empty warehouses with an industry ready to shell this year’s crop. Even if harvest goes well, though, with few weather-related hiccups, handling the 2017 crop will be a tough logistical dance.
Remember, planting was scattered over three and half months this year and that should help in the handling and better spread out the delivery of peanuts to buying points. But that extended planting also puts later-planted peanuts at a higher risk for early season freezes or damage from tropical weather. (On Oct. 5, a tropical depression wanting a name formed in the Gulf of Mexico with the country’s top peanut producing region directly in its projected path.)
Other than weather, what happens in other countries, more and more in recent years, matters to U.S. peanut farmers’ domestic and global marketing.
Global peanut points to know include:
Production in India has been on a decline, mainly due to low prices;
China has had good growing conditions, but recent bad weather has reduced some quality;
Argentina harvest has been challenging, but reports are they have enough supply to satisfy demand;
There have been aflatoxin issues with U.S. exports to the E.U. But some of that might be due to bureaucratic or reporting inconsistencies between the two regions, which the U.S. peanut industry is currently investigating.
U.S. exports have been down, particularly to Mexico, China, and Vietnam, but are still projected to be high.
The demand for U.S. peanuts continues to increase, Rabinowitz said. USDA projects total use to be 3.3 million tons for the 2017/2018 U.S. crop year, up 6 percent from the previous year. U.S. peanut exports, as they have in the last few years, look to remain strong at about 750,000 tons for this crop year, which will be the second-highest export year.
The majority of the U.S. peanut belt, except for Florida, escaped with just a glancing blow from Hurricane Irma, and late-September and early October weather provided ideal harvesting conditions for much of the U.S. peanut belt as diggers and pickers hit the high gears. But again, tropical weather continued to threaten the major peanut-producing region of the country as fall weather crept in.
If 2017 peanut production delivers what is being advertised at this point, farmers will plant the 2018 crop facing a record carryover in supply, which will have the expected effect: early 2018 contract prices won’t be pretty, if they are offered at all.
Peanut farmers who held on to some of their expected 2017 production and didn’t have contracts secured as harvest began this year will likely be placing tons in the loan and receiving less per ton than peanuts contracted at planting time or early this summer, Rabinowitz said Sept. 27 at the outlook conference in Atlanta.
The Price Loss Coverage payment for the 2016 crop will be sent to farmers this month and is expected to be about $140 per ton, and growers will need that cash flow.
Stanley Fletcher, director of the National Center for Peanut Competitiveness, told the Georgia Peanut Tour during the Hot Topic session Sept. 19, that farmers who plant peanuts grow and manage other commodities, too, such as corn, soybean, wheat and cattle. And farmers are economically hurting almost across the board in the last few years.
The center recently updated its representative farm program, which collects and analysis economic and production data from farmers across the peanut belt.
Farmers have basically three loan notes:
Operating loan note in spring;
And a land note.
“What’s happening with about every farm group I talk to (and what the representative farm models show) is that they are not going to be able to make all those (note) payments, and it’s being rolled into the land note, which means farmers are farming away their equity, or their retirement party, based on (current prices and cost of production),” Fletcher said.
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