Drought that reduced production and created quality problems in the Southeast last year; an ongoing drought for the 2011 Southwest crop; and increased demand for peanuts has sent peanut contract prices to record levels that should continue into the 2012 crop.

“Supply has tightened up,” said Tyron Spearman, editor of Peanut Marketing News. “We had a shortage last year, and we have reduced acreage this year. We’re not sure of the acreage but we think it’s around 10 percent less than last year, and demand is up 10 percent so we need the peanuts.”

Spearman said prospects for a good 2011 crop remain uncertain. “The jury is still out. The Southwest is still very dry, and the Southeast has been dry but has received some rain recently so conditions are looking better. We are optimistic that we’ll make a good crop if we can get rains between now and harvest time.”

He said prices are at an all-time high.