Peanut production will be down for 2002 due to fewer acres planted and a smaller yield. Yields are projected to be better than average but not as high as 2001.
The Southeast has been hurt by drought again, particularly in the Atlantic Coast states of Virginia, North Carolina, South Carolina and parts of Georgia and Alabama. Disease and insect pressure also have damaged the crop in the Southeast.
Yields could further decline with rainy weather that has hampered harvest in several states.
USDA's October estimate of the 2002 U.S. average peanut yield was 4.75 percent lower than last year at 2,885 pounds per acre. Regionally, yields look as follows: Southeast 2,731 pounds per acre, 12.9 percent below 2001; Virginia-North Carolina 2,373 pounds per acre, 20.7 percent below 2001; Southwest 2,972 pounds per acre, 4.7 percent above 2001. Planted acreage in 2002 is down 5 percent at 1.462 million acres which continues an overall downward trend since the 1996 farm bill.
Most of the decline comes from the Southwest and Virginia/Carolina regions where producers planted 65,700 fewer acres of peanuts.
The Southeast is shown as planting 14,300 more acres. Harvested acres are forecast to be 93 percent of the planted acres at 1.361 million. The 7 percent abandonment would be the same percentage as in 2001.
USDA is projecting total production in 2002 to be 3.75 billion pounds (1.875 million tons) which would be a 12 percent decrease from last year.
Regionally, Southeast production is expected to be down 11 percent from 2001 at 2.23 billion pounds (1,120,000 tons). Southwest production is estimated down 2 percent from 2001 to 1.138 billion pounds (569,000 tons).
Virginia-North Carolina is estimated at 375 million pounds (187,500 tons), down 36.5 percent from 2001.
Besides production, carry-in stocks plus imports make up the total supply of peanuts. Carry-in stocks from last year were estimated to be 1.540 billion pounds or 770 million tons farmer- stock equivalent. Imports are projected down in 2002 as a result of the lower support price. The USDA estimate is 25,000 tons.
However, the minimum access import levels were not affected by the farm bill, thus imports likely will be closer to 100,000 tons. Incorporating a normal import estimate, total peanut supply is projected to decrease by 88 million pounds to 5.49 billion pounds in 2002.
Turning to peanut consumption, domestic food use fell by 3.5 percent in 2000 but rebounded up 3.6 percent in 2001. The trend since 1996 has been a 2 to 3 percent increase for domestic edible use of peanuts. USDA is forecasting a big increase in food use of 11 percent for 2002. Though very encouraging, this level of increase may be optimistic given long-term trends and the export outlook.
Looking at use by product, snack use held steady last year while candy use dropped 1.6 percent. Peanut butter use, however, increased 17 percent to bring total shelled use up. Government purchases of peanut butter for food and child nutrition programs dropped by 6.5 percent from last year. Peanut butter now makes up about 95 percent of government purchases, but total government purchases are only about 1.1 percent of domestic food use.
Crush levels currently are estimated to be about the same as last year at 713 million pounds (356,000 tons). The abundant supply of oil continues on the world market putting downward pressure on peanut oil and meal prices.
Exports are projected by USDA to be 713 million pounds (356,500 tons).
Total disappearance including food use, crush, exports, seed and residuals is projected to be a 4.27 billion pounds (2.14 million tons).
This would give an ending stocks figure of 1.22 billion pounds (609,500 tons). A decrease in ending stocks of 320 million pounds would be encouraging except for the fact that a large amount of 2001 additionals have been carried forward from 2001.
Shellers have until March 2003 to “dispose” old crop inventory that was purchased out of the 2001 additionals loan pool. This likely is negative for prices in that the United States expects to export about 350,000 tons of farmer stock. But, old crop inventory will be competing with new crop inventory for those exports. The holiday season is the peak season for European demand for U.S. exports.
For 2002 crop to be competitive in the export market, the new loan repayment price for peanuts, known as the National Posted Price (NPP), needs to reflect world prices. Our main competitor in the export market, Argentina, is reportedly priced at $270 per ton in Rotterdam. Currently, the NPP is reflecting a domestic price ranging from a high of $386 to a low of $318 per ton through October.
The National Posted Price will have to approach world prices in order to export more peanuts. The Secretary of Agriculture sets the National Posted Price for peanuts weekly on Tuesdays.
The NPP can be adjusted to minimize cost and forfeiture of the crop to the government.