Market Watch

Buyers Are Covered For Now, Leading To A Lackluster Market

The peanut market is and has been quiet for months. Manufacturers are not interested in 60 centsper-pound peanuts and know that the industry has a good quality crop in warehouses, plus a 1-million-ton carryout. There seems to be downward pressure on the shelled market but not enough interest to move the market.

Meanwhile, the peanut producer is faced with increased costs and inflation. Thus far, growers have been unwilling to negotiate and are still studying their options. One official says, “all eyes are on cotton and China.”

There is little discussion about the price of farmer-stock contracts, and time is passing. With the shelled market stalled, manufacturers seek to find prices more along the low 50 cents per pound. Brokers and others describe the market as “dull.” It’s obvious contracting will not begin until shellers get some signals from manufacturers they are willing to buy that level.

Watching Cotton

The highest daily spot price for cotton in 2022 was May 4 at $1.50 per pound. The lowest was Oct. 31 at 72 cents. Cotton acreage and production will decline in 2023 because of lower price expectations compared to competing crops. An optimistic futures price in 2023 is 80 to 85 cents per pound. Conversely, a pessimistic price is 69 to 75 cents per pound. For planning and budget projections, Extension economists suggest a price of 72 to 78 cents.

Supply

The supply of peanuts was reduced by 2 million pounds last month to 5.57 billion pounds. A yield reduction for Georgia and Alabama and a reduction in harvested area for Texas account for most of the decline. Reduced U.S. peanut production in 2022, resulting from fewer harvested acres and a lower peanut yield of 4,019 pounds per acre, trims the estimated total peanut supply by 203 million pounds, a 2.5% reduction. It still leaves 1.1 million tons as ending stocks and is a market depressor.

The Price Loss Coverage program will not have an impact on the farmer’s plans and could be $5 per ton next October. One sheller recently announced a payout of $22 per ton above contracts and other premiums for seed or irrigation. A new ReGeneration cover crop program may net the famer another $10 per acre. The U.S. Department of Agriculture is initiating new programs for climate-friendly management on the farm.

Exports

U.S. peanut exports are reduced by 100 million pounds to 1.1 billion. Carryout is forecast to remain at 2.18 billion pounds, below the 2021/22 carryout of 2.36 billion pounds.

J. Tyron Spearman Contributing Editor, e Peanut Grower

China has reduced peanut purchases by 39% compared to 2021 (JanuaryOctober). However, the country has still bought more than 68,000 metric tons of kernels and processed product. Although China is the biggest food importer in the world, they are entering a population crash after 40 years a self-imposed onechild policy. Some reports indicate the population could dwindle from the current 1.4 billion to 1.0 billion by 2050.

Mexico and Canada have purchased more than 56% of the exports with the Netherlands and Japan ranking fourth and fifth, respectively.

Trade Help Needed

Peanut leaders have written the U.S. Undersecretary of Trade and the Chief Ag Negotiator to bring to their attention non-tariff trade barriers of imports from the United States into the European Union, which are being unreasonably targeted for aflatoxin. Fair testing protocols would increase U.S. exports.

The American Peanut Council was approved for $2.4 million for Market