What is in this article?:
• “From a total production standpoint, there is an adequate supply of peanuts.
• But from an edible supply standpoint, the market is tight.
• The problem is that manufacturers are looking at the total supply.
• They’re looking at the total supply, not the edible supply, and there’s a huge standoff right now between shellers and manufacturers.
Reason for early contracts
“This is why there were early contract offers. But in 2008, we produced 2.5 million farmer stock tons. Add this to the 77,000 tons of imports, and it gave us a 3.1 million-ton supply. Take off a 2-million ton demand, and that left a carry-out from 2008 going into 2009 of 1.1 million farmer stock tons, double the amount we need.”
Add this to a production in 2009 of 1.8 million, imports of 54,000 tons, and there’s an approximately 3-million-ton supply, says Lamb.
“Take off demand, and we go from 2009 and into 2010 with 900,000 tons. It takes a while to cycle out excess carry-overs. We brought forward 900,000 tons into this year and produced 2 million farmer stock tons. With 54,000 tons of imports, that gave us 3 million farmer stock tons again.”
The difference, he says, is that a lot of production in 2010 was not of good quality.
“We had a lot of aflatoxin and Seg. 2’s and Seg. 3’s in our area. We had a good bit of aflatoxin in our edible peanuts to increase milling losses, which are normally 4 to 7 percent. The milling losses from dryland peanuts grown in southwest Georgia, southeast Alabama, and central Georgia are running 30 to 35 percent. They can’t blanch it out of the peanuts, and we don’t have the blanching capacity in the Southeast to take care of this crop, so quality is a major issue.”
The extra crushes are added on the demand side, says Lamb, and demand for peanuts has increased very well. “When we take off these extra peanuts for crushing, that leaves us 665,000 tons of carry-out, getting us back to more reasonable number.”
If you look at the amount of peanuts crushed, from 2006 to 2009, it’s always about 230,000 farmer stock tons, says Lamb. This year, it’s up to about 498,000 tons.
“The excess losses on dryland peanuts of 30 percent are hurting us on milling losses, which further reduces the amount of edible peanuts. That’s what we need to start thinking about in peanut production. Don’t think about delivering an in-shell farmer stock peanut. With this problem, we have to think of ourselves as growers of an edible commodity. When we adjust this on an edible basis, the carry-out is about 490,000 farmer stock tons.
“The markets are extremely tight right now, and we have two piles of peanuts. We have total farmer stock, and then we have edible peanuts. That’s causing some confusion in the markets.
Looking at current commodity prices, soybeans, corn and wheat all look good, he says, but cotton is driving the peanut industry, not just here but in west Texas.
“The weak dollar is working in agriculture’s favor, but the problem is in hidden costs. Fuel will continue to go up and add to the cost of everything we touch.”