www.caes.uga.edu/departments/agecon/extension/agoutlook/
Peanut Situation & Outlook
Southern Outlook Conference
Atlanta, GA
September 22, 2008
Nathan B. Smith, Amanda R. Smith
Current Situation
• Improved Production Prospects
– 2007 production 1.87 M tons, 8% higher than 2006.
(Federal State Inspection Service shows 1.81 M tons
inspected)
– 2008 production estimate pegged at 2.38 million tons, 3rd
largest on record if realized.
– US Acreage is up 25% in 2008
• Stocks down from this time last year:
–
–
–
–
Farmer stock peanuts in storage are down 52%,
Shelled stocks are down 16%,
Roasting stock up 37% and
Oil stocks are up 18%.
• Exports increasing, up ~60% from 2005.
• Domestic food use projected to increase less than
1%.
Peanut Planted Acreages
2004
2005
AL
200
FL
(1,000 acres)
2006
2007
2008*
225
165
160
195
145
160
130
130
145
GA
620
755
580
530
685
MS
-
15
17
19
22
SC
35
63
59
59
71
SE
1000
1218
951
898
1118
NM
17
19
12
10
8
OK
35
35
23
18
19
TX
240
265
155
190
255
SW
292
319
190
218
282
NC
105
97
85
92
99
VA
33
23
17
22
24
V/C
138
120
102
114
123
US
1,430
1,657
1,243
1,230
1,533
*Source: NASS Crop Production Report, Sept 12, 2008
Peanut Yields
2005
2006
2007
2008*
AL
FL
GA
MS
2750
2700
2840
3200
2500
2500
2780
2900
2600
2700
3150
3300
3000
3100
3150
3300
NM
NC
OK
3500
3000
3270
3600
3200
2850
3500
2800
3400
3500
2900
3800
SC
TX
2800
3750
3000
3550
3100
3950
3400
3500
VA
3000
3200
2700
2900
US
2989
2863
3130
3188
Source: NASS Crop Production various issues, *September Estimate
US Peanut Yield
Lbs/Acre
(1978 - 2008)
3,500
3,250
3,000
2,750
2,500
2,250
2,000
1,750
1,500
3,159
78
80
82
84
86
88
90
92
94
Year
US
96
98
3188
'00 '02 '04 '06 '08
Total US Peanut Supply
4000
3500
1,000 Tons
3000
2500
2000
1500
1000
500
Production
Imports
Ending Stocks
2007 Estimate 1.1% decrease in US acreage, 3,130 lb yield, 2.151 M tons use
2008 Forecast 25% acreage increase, 3181 lb yield, 2.260 M ton use
'08 For
'07 Est
'06
'05
'04
'03
'02
'01
'00
99
98
97
96
95
94
93
92
91
90
0
Peanut Disappearance by Use
3000
2000
1500
1000
500
Food Use
Crush
Production
'0 '05
6
E
'0 st
7
'0 For
8
Pr
oj
'0
4
'0
3
'0
2
'0
1
'0
0
99
98
97
96
95
94
93
92
91
0
90
1,000 Tons
2500
Exports
Seed, Shrink, Resid
Carryover
Shelled Edible Use in
Primary Products
1,000 lbs
Candy
Aug 07’ to
Jul 08’
% Diff from
06/07
425,166
+ 2.4%
1,012,263
+ 1.9%
Snacks
320,467
- 14%
Total
2,141,552
- 1.6%
150,204
- 2.3%
Peanut Butter
In-Shell
US Peanut Exports
1200
1000
M lbs.
800
600
400
200
Crop Year
Exports = 18% of total disappearance in 2008
'0
8
'0
6
'0
4
'0
2
'0
0
98
96
94
92
90
0
Input Costs on the Rise
Prices Paid Indices by Sub-Component
675
1990-92 = 100
575
475
375
275
175
75
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Nitrogen
Supplies & Repairs
Diesel
Herbicides
Potash & Phosphate
Insecticides
Wage Rates
Fungicides
Impact of Fuel & Fertilizer Prices on
Cost of Crop Production ($/acre)
$700
$600
$500
$400
$300
$200
Cotton
Peanuts
2002
* Does not account for changes in technology.
Corn
2008
Soybeans
Non-Irrigated Crop Comparison
September 9, 2008
SUMMARY OF 2008 SOUTH GEORGIA CROP ENTERPRISE ESTIMATES
Conventional Tillage
By Amanda R. Smith, Nathan B. Smith and W. Don Shurley, UGA Extension Economists, Department of Agricultural & Appl
EXPECTED YIELD
CURRENT PRICES
GROSS RETURN
TOTAL VARIABLE COSTS
RETURN ABOVE VARIABLE COST
TOTAL SPECIFIED FIXED COSTS
BR
Cotton
700
$0.610
$427
$430
($3)
$138
TOTAL COST EXCL. LAND & MGT
RETURN TO LAND AND MGT
$568
($141)
Peanuts
2,700
$500.00
$675
$533
$142
$140
$673
$2
NON-IRRIGATED
RR
RR
Grain
Corn
Soybeans Sorghum Wheat
85
30
65
55
$5.00
$10.50
$4.50
$4.00
$425
$315
$293
$220
$304
$222
$238
$189
$121
$93
$54
$31
$57
$53
$54
$37
$361
$64
$274
$41
$293
($0)
$226
($6)
BREAKEVEN PRICE
$0.81
$498.40
$4.24
$9.15
$4.50
BREAKEVEN YIELD
931
2,691
72
26
65
* As of April 21, 2008 Fertilizer Prices per Pound of Nutrient were as follows: N=$0.60, P=$0.70, K=$0.50
** Calculated using a Diesel Fuel Price at $4.00 Gallon
*** Assuming Diesel Irrigation. Electric is estimated to be 45% of the cost of $4.00 Diesel Irrigation
$4.11
56
Irrigated Row Crop Comparison
September 9, 2008
SUMMARY OF 2008 SOUTH GEORGIA CROP ENTERPRISE ESTIMATES
Conventional Tillage
By Amanda R. Smith, Nathan B. Smith and W. Don Shurley, UGA Extension Economists, Department of Agricultural & Applied
EXPECTED YIELD
CURRENT PRICES
GROSS RETURN
TOTAL VARIABLE COSTS
RETURN ABOVE VARIABLE COST
TOTAL SPECIFIED FIXED COSTS
BR
Cotton
1,100
$0.610
$671
$582
$89
$232
TOTAL COST EXCL. LAND & MGT
RETURN TO LAND AND MGT
$814
($143)
Peanuts
3,700
$500.00
$925
$677
$248
$237
$914
$11
IRRIGATED
RR
Grain
Int Mgmt
Corn
Soybeans Sorghum Wheat
185
55
100
75
$5.00
$10.50
$4.50
$4.00
$925
$578
$450
$300
$657
$316
$333
$306
$268
$261
$117
($6)
$164
$147
$149
$59
$822
$103
$464
$114
$482
($32)
$365
($65)
BREAKEVEN PRICE
$0.74
$494.31
$4.44
$8.43
$4.82
BREAKEVEN YIELD
1334
3,658
164
44
107
* As of April 21, 2008 Fertilizer Prices per Pound of Nutrient were as follows: N=$0.60, P=$0.70, K=$0.50
** Calculated using a Diesel Fuel Price at $4.00 Gallon
*** Assuming Diesel Irrigation. Electric is estimated to be 45% of the cost of $4.00 Diesel Irrigation
$4.87
91
Outlook
• Current prices favor peanuts compared to cotton
and corn (dryland).
• Bumper crop will cause prices to back off of
$500 per ton at harvest.
• 2009 plantings will depend on contracts:
– Growers are saying will take $600+ per ton price due
to higher input costs,
– However, growers will be tempted to grow, same or
more peanuts if cotton does not rally,
– Should consider the possibility of $355 per ton on
non-contracted peanuts if have record crop.
Crop Rotations
(GPAC % Growers Applied)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2004
2005
Corn
Cotton
2006
Crn/Ctn
2007
Other
Years Between Peanut Crops
(GPAC % Growers Applied)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2004
2005
< One
Two
2006
Three
Four
2007
> Four
Tillage
(GPAC % Growers Applied)
Bottom plow
Disc harrow
Field cultivator
Rip & Hip
V-Ripper
Hydro-Till
Rototill/Tillovator
2004 2005 2006 2007
75
88
67
62
50
69
67
67
38
63
50
29
13
6
10
6
6
6
8
19
25
19
10
Conservation Tillage
(GPAC % Growers Applied)
20%
15%
10%
5%
0%
2004
2005
Stip Tilled
2006
No Tilled
2007
2008 Farm Bill
Subtitle C - Peanuts
• Peanuts were able to remain a separate title
(distinguished from “covered commodities”)
• Maintains a separate payment limit for peanuts
– $40,000 Direct Payment Limit
– $65,000 Counter-Cyclical Payment Limit
• Direct Payment same at $36/ton
• Target Price same at $495/ton
• Advances and timing of DCP same as “covered
commodities”
• Payment level changes to 83.3% for 2009-2001
Peanut Market Assistance
Loans
• $355 National Loan Rate
• 9 month loan beginning first day of the
first month in which loan is made.
• Marketing loan may be obtained thru:
– FSA county office,
– Designated Marketing Association,
– or Cooperative Marketing Association
Marketing Loan Changes
• Change in Storage, Handling and Associated
Cost Rules
– Handling and associated costs (other than storage)
will be paid by the Secretary (CCC) incurred at the
time peanuts are placed under loan to be repaid at
redemption of peanut loan.
– Pay for storage, handling, and other associated costs
for all forfeited.
• Adjustments of loan rates? “The Secretary may
make appropriate adjustments in the loan rates
for peanuts for differences in grade, type,
quality, location, and other factors.”
USDA Proposal
• White paper sent out to peanut industry
proposing to adjust loan rates by type to reflect
price differentials by type.
• Based on NASS prices since 2005 would result in
lowering the 2007 loan rate for runners from
$355 to $348 per ton.
– Also would raise virginia ($382) & spanish ($377)
• Looking a phasing in the loan differentials
beginning with 2009 crop.
Peanut Stewardship
• Peanut eligible under new CSP program
for stewardship payments for “adopting” a
resource-conserving rotation (4-year?).
• 5-year contract.
• Originally proposed as PERS program for
peanuts.
4000
800
3500
700
3000
600
2500
500
2000
400
1500
300
200
1000
100
500
0
0
Year
Cotton
Peanut
Peanut Farmer Stock
Lb/Acre
900
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
Cotton Lint Lb/Acre
Georgia Cotton & Peanut Average
Yield: 1990-2007
Georgia 7 Major Row Crops Planted Acres*
(1,000 Acres)
2003
Corn
340
Cotton
1300
Peanuts
545
Grain Sorghum55
Soybeans
190
Tobacco
27
Wheat
380
Total
2837
2004
335
1290
620
45
280
23
330
2923
2005
270
1220
755
40
180
17
280
2762
2006
280
1400
580
40
155
17
230
2702
2007 2008?
510 435
1030 950
530 625
65 75
285 400
20 17
360 480
2800 2982
*Source: NASS Crop Production, Various Issues, UGA Preliminary Estimate
US Dollar Index
Total Cost of Crop Production,
2002 and 2008 ($/acre)
Fixed Costs
Variable Costs
$1,000
$800
$600
$400
$200
$0
Cotton
Peanuts
Corn
Soybeans
2002 2008 2002 2008 2002 2008 2002 2008