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Consumer confidence is key to 2009 peanut markets

Kim Anderson knows wheat markets.

And when he’s called on to discuss the economics of producing peanuts in the Southwest, Anderson, Oklahoma State University Extension economist, consults colleague Nathan Smith, University of Georgia economist.

Anderson used data from Smith and information gleaned from the audience to discuss markets and budgets for 2009 peanut production at the Oklahoma Peanut Expo in Lone Wolf, Okla.

Conclusions indicate peanut acreage will drop this spring and prices likely will hold around $355 per ton.

Anderson said Smith’s figures show “a significant amount of non-contracted peanuts going into the loan likely will be the best possibility for prices to reach above $400 per ton.” Price for corn, cotton and soybeans will play critical roles in final peanut acreage. University of Georgia figures show corn at $4 per bushel, soybeans at $8.50 a bushel and cotton at 60 cents a pound would be better bets than peanuts at any price below $400 a ton.

A bumper crop in 2008 and the salmonella scare stalled the market.

USDA figures show U.S. peanut acreage was up 25 percent in 2008 and growers produced a record 3,416 pounds per acre average yield from 1.5 million harvested acres.

Georgia and Texas producers both averaged 3,400 pounds of peanuts per acre last year. Alabama farmers made 3,300, South Carolina averaged 3,900, Oklahoma came in at 3,500, and North Carolina growers produced 3,700 pounds per acre. Florida and New Mexico both averaged 3,200 pounds and Virginia growers made 3,300.

Other factors affecting peanut demand for 2009 include:

• Farmer stock peanuts in storage are up 45 percent.

• Shelled stocks are up 13.8 percent.

• Roasting stock is down 22 percent.

• Production of shelled oil stocks is down 27 percent.

Those figures indicate a likely 25 percent decrease in peanut acreage for 2009. Yield is projected at 3,000 pounds per acre.

University of Georgia figures indicate export demand continues to have a positive impact on peanut markets with export sales up 60 percent since 2005 and accounted for 16 percent of total peanut disappearance in 2008.

Before the salmonella outbreak, projections called for domestic food use to be up 2.9 percent. “Consumer confidence is the key to recovery (of the domestic market) in 2009,” Smith reported.

Production costs for the 2009 crop will be lower than for 2008, primarily because of drops in fuel and fertilizer expenses, which marked increases of nearly 400 percent from 1999 to 2008. The most precipitous rise came from mid-2007 through mid-to-late-2008. Farm machinery and farm supplies and repairs were also up but not as sharply as fuel and fertilizer increases, according to UGA figures.

Georgia data also show only slight differences in overall production costs and returns between conventional and strip-tillage methods in both irrigated and non-irrigated peanuts.

Anderson sought input from the audience to develop working budgets for 2009 peanut production. Based on participant information and projected markets, Anderson figured total operating costs for irrigated peanuts in 2009 would be $660.43 per acre. Returns above operating costs would be $59.57.That factors in a price of 18 cents a pound and a 4,000 pound per acre yield.

Non-irrigated peanuts showed a $24.91 net loss in 2009, figuring an average yield of only 1,800 pounds per acre at 18 cents per pound.

Yield estimates and production costs for various inputs varied within the audience, sometimes significantly for items such as fertilizer, disease control and herbicide applications. Anderson said differences emphasize that growers must develop farm-specific budgets, based on field histories, rotation schedules and other costs.


TAGS: Peanuts
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