United States
Peanut harvest is a little over half-way complete, and in the next 2-3 weeks, will be near completion in the US. FSA Certified Acres reported planted acres at 1,644,034 for October. The USDA estimates harvested acres to be 1,598,800 with a yield of 3,908 pounds/acre, which would produce a total of 3.124 million farmer stock tons. However, taking into account there was a big increase in acres in Texas, likely resulting in less harvested acres than estimated, and yields are coming in much lower than anticipated. Final production will probably end up closer to 3 million farmer stock tons than 3.124 million, reports Nuts by ofi
Aflatoxin issue
Also, with this crop, we are seeing aflatoxin and Seg 2’s & 3’s, something we haven’t had to deal with for a few years. These issues will even further reduce the edible products available. However, it is still too early to know to what extent. US demand is holding up fairly well in the 3 million ton range and we have seen increased export interest. Though we have an estimated ~1.016 million ton 2022 crop carry-out, production between 3 million and 3.1 million tons will be just enough to get the US to the 2024 crop, but certainly not enough to create a surplus. Anything less than 3 million farmer stock tons will cause a shortage, especially with the quality issues.
Limited offers
Activity in the US kernel market for the 2023 crop has ramped up a bit over the last month, with buyers looking to add a layer for the first half of next year as well as cover any shortage for the remainder of this year. Most shellers are comfortable in their current position, and not eager to offer. Offers through December 2023 are extremely limited, with some materials unavailable. Blanching slots remain extremely tight into Q1 of 2024, and offers are limited to non-existent through the end of this year. With the forementioned quality issues as well as the unknown cost of remaining farmer stock yet to be contracted, kernel prices have crept up into the mid to upper $0.60’s, with limited offers.
Possible Bullish Factors
- The apparent quality issues so far with the US crop – The US experienced extreme heat and lack of rain during the growing season, causing drought conditions in some areas. Those areas are seeing yield and quality (damage and aflatoxin) issues, which have driven up the prices of the remaining farmer stock as well as shelled kernels. Whether these escalated prices remain is yet to be determined.
- Anticipation of increased export demand – How much European demand will remain in the US and for how long? Will China be a factor for the new US crop? Their peanut production is reported up this year (back to more normal quantities) and their economy is still sluggish.
- If the upward trend in cotton futures continues, there could be a possible reduction in peanut acres for 2024, as growers may choose to plant more cotton versus peanuts. This could cause a tight peanut market, thus an increase in prices.
Possible Bearish Factors
U.S. demand – Current usage, particularly in the snack and candy segments, seems to be trending down slightly.