An unexpected bit of salvation, Lamb says, was that problems with India’s crop resulted in China coming into the market and buying U.S. peanuts.

“India is a large supplier of peanuts to China, and when China came into the market they came like a raging bull. This helped to reduce our large stockpile of peanuts. But when China stopped buying, they stopped cold. I’m told they are now showing some renewed interest, and we certainly hope they will begin buying again.

“Exports have helped reduce the big oversupply from 2012, and I don’t think we’ve accounted for all the export numbers yet because of the lag in reporting.”

While manufacturers “would be happy for carryout to stay at 800,000 to 900,000 FST, which would keep contract prices to farmers at $450 to $475 per FST,” Lamb says, “the big question now is how much production is needed in 2013” to get the U.S. to the optimum-for-growers 600,000 FST carryout?

“To get back to a reasonable carryout, we need about 1.5 million FST of production, or 3,400 pounds per acre on 980,000 acres. But it has been a long time since we’ve had that few acres. That would be a 40 percent decrease from 2012 and about 30 percent from the 2008-12 average.

“USDA is currently forecasting an average yield of 3,800 lbs. I can’t for the life of me see that happening; except for 2012, we’ve never produced that many peanuts. I prefer to use 3,400 lbs.”

In the weeks ahead, Lamb says, growers need to be aware of forfeiture dates for peanuts in the government loan.

“When peanuts are put in the loan, the grower has 9 months to market that crop. The loan is non-recourse — you can forfeit the peanuts and walk away, and the government will assume the responsibility of getting them sold. But, there currently are offers for loan peanuts, and farmers should not let a loan expire if they have an offer.”

He says 11,000 tons of peanuts in the loan expired in June; 300,000-plus tons will expire in July. “The big bad boy on the block is August, when 640,000 tons will come up for forfeiture, if not sold. I hope all will get sold.” In September, about 250,000 tons will expire, and October just under 200,000.

“In the last couple of weeks, shellers have been trying to buy loan peanuts,” Lamb says. “I don’t think we really want to see a lot of peanuts forfeited. The peanut program is working, and if a lot of peanuts are forfeited, it will result in increased costs to the government — and I think that’s something we need to stay away from.

“Farmers who have peanuts in the loan need to keep an eye on expiration dates and try to avoid forfeiture if offers are available. There’s no need to forfeit peanuts if there’s an offer on the table.”