KANSAS CITY — Observers of the currently pegging peanut crop said they were optimistic 2012 will be a recovery year after two disappointing years hurt mostly by persistent drought, although the growing season still had a long ways to go.
“We’re off to a good start,” said John Beasley, professor of crop and soil sciences and extension peanut agronomist at the University of Georgia.
“Right now, the crop looks wonderful” in South Carolina, said Scott Monfort, state extension peanut specialist, with weeds being the only problem there.
The latest Crop Progress report from the U.S. Department of Agriculture showed peanut plantings have maintained a healthy edge on good-to-excellent conditions at 68% as of July 1, compared with only 30% at the same time in 2011.
Acres were up sharply as well. In the June 29 U.S.D.A. annual Acreage report, surveyed producers in the 10 major peanut-growing states said they planted 1,526,000 acres in peanuts this year, up from 1,422,000 acres indicated in the U.S.D.A.’s March 30 Planting Intentions report and up 385,400 acres, or 34%, from 1,140,600 acres in 2011. Cotton, which competes with peanuts for land in some states, declined to 12,635,000 overall acres in 2012, down 14% from 14,735,400 acres in 2011, the U.S.D.A. said.
On June 28, the U.S.D.A. reported peanut prices averaged 35.3c per lb, or $706 a ton, for the week ending June 23, an increase of 1.7c per lb from the previous week. Although peanut prices have moderated in recent weeks, U.S.D.A. data show prices from early August 2011 until the present have mostly stayed above the 2010-2011 crop year levels, which also was viewed as an inferior harvest because of problems with aflatoxin. That price firmness undoubtedly influenced some producers to plant peanuts instead of its main competition, cotton, which has declined sharply in price from a year ago. Peanuts and cotton are frequently rotated to maintain soil condition.
The increase in peanut acreage and the favorable temperatures during planting time in April and May, coupled with generous early rainfall, have peanut prognosticators thinking top-producer Georgia might experience yields as high as 3,500 lbs per acre on a larger base of acres this year. The U.S.D.A.’s most recent Acreage report said 710,000 acres were planted to peanuts in Georgia in 2012, up nearly 50% from 475,000 acres in 2011. U.S.D.A. data showed peanuts in 2011 yielded 3,520 lbs per acre in Georgia, slightly below the record 3,560 lbs per acre in 2009 when planted area was 510,000 acres.
“With more supply, prices should go down as the new peanuts enter the pipeline,” Mr. Beasley said.
That could mean good news for consumers of peanut butter who in some cases last summer were paying 30% more than a year earlier for jars of market-leader Jif and other brands due to tight peanut supplies after 2011’s smaller crop and 2010’s aflatoxin contaminated supply.
On the other hand, as Tyron Spearman, executive director of the National Peanut Buying Points Association, said, “The price of a food is the price that moves it off the shelf.”
Last year, with a 4.9% increase in sales compared to 2010, customers showed they were willing to pay more for peanut butter, a powerful disincentive for producers to slash prices when supply surges, he noted.
As things stand, despite good April-May rainfall, expanded acreage and slightly earlier-than-normal planting in some locations, prices for peanuts have stayed relatively firm. Mr. Monfort estimated raw peanuts currently bring from $500 to $700 a ton, less than the $1,000 a ton seen at the height of last year’s crop debacle but in line with the $650 a ton posted for most of the last crop year.
Peanut pricing is an arcane business and there is no central exchange where prices are posted, market participants noted. Farmers typically contract at least a portion of their new crop with shellers well before any peanuts are planted. The market is thinly traded and there are times when product on a spot basis is temporarily unavailable at any price. Some observers said a fair number of producers held out for higher prices in late winter 2012, only to lose the opportunity to lock in the best prices of the season, which were less than last year but may have been very favorable for 2012.
Dry weather was becoming a concern last weekend as the South experienced hot, dry weather conditions, market watchers said. With the widespread use of irrigation, the peanut crop was not as vulnerable to drought as row crops that have been baking under Midwestern skies.
A great deal can happen between spring planting and harvest in September, and the fact is much of the South is still considered to be in a drought. While experts recently were praising the planting conditions of the crop during the spring of 2012, now they are turning their attention to the ongoing lack of rain.
As has been true in the past, irrigation is a necessity to bring this year’s peanut crop to fruition, said Keith Ingram, director of the Southeast Climate Consortium.
“South Georgia, the Panhandle of Florida and Alabama are still in severe drought,” he said. “This has led to reduced pests and high sunlight, but without irrigation, there will be reduced acreage.”
Alabama is not as heavily irrigated as Georgia, Florida, the Carolinas and Texas because it has a less even terrain, he said. He pointed out that producers have to pay to pump water into their fields and the cost to do so is not likely to fall.
“In South Georgia,” he said, “the aquifer is at its lowest level in history.”
Mr. Ingram had confidence that irrigation will compensate for insufficient rainfall through the peanut growing season, but he was adamant about the role of water technology.
“Without irrigation, you can’t grow the crop,” he said.