What is in this article?:
- Peanut buyers forecast a significant drop in acres for 2013
- Working on contract details
- With a huge oversupply from the all-time record 2012 crop going into the 2013 marketing year, surprise purchases by China helped to brighten what had been an otherwise somewhat gloomy outlook. But still, says Kevin Calhoun, procurement manager for Birdsong Peanut Company, the outlook is for acreage cutbacks this year of as much as 30 percent to 40 percent. He spoke at the annual meeting of the Mississippi Peanut Growers Association.
With peanut contract prices last year reaching as high as $1,000 per ton, “planting peanuts was a no-brainer” for Mississippi growers, says Kevin Calhoun, procurement manager for Birdsong Peanut Company.
“High prices brought a lot of growers to last year’s Mississippi Peanut Growers Association meeting,” he said at the organization’s conference this year. “With the outlook this year for prices to be down substantially, it’s good to see so many growers here — it indicates you believe peanuts have a future in your state.”
Calhoun, along with Golden Peanut Company President Kris Lutt and Clint Williams Company President Alan Ortloff, discussed the outlook for peanuts in 2013 at the MPGA meeting.
With a huge oversupply from the all-time record 2012 crop going into the 2013 marketing year, Calhoun says surprise purchases by China helped to brighten what had been an otherwise somewhat gloomy outlook. But still, the outlook is for acreage cutbacks this year of as much as 30 percent to 40 percent.
“Prices for other commodities will have an impact on how many acres of peanuts growers plant this year,” he says. “If current corn and soybean prices hold, we can assume the Southeast states will max out acres for those crops.
“Everyone is expecting huge cutbacks in cotton, but if it stays at 85 cents or better, the drop in acreage may not be as severe as everyone has thought. If we include Mississippi and Arkansas in the Southeast, peanut acres could still probably be over 800,000.”
Even with China’s purchases, Calhoun says, the U.S. still needs to sell a lot of peanuts. “To move this crop, we’ve got to increase consumption, and we have to find other opportunities for exports. Hopefully, the dark days are behind us and peanut consumption will be moving back up as consumers begin seeing lower prices for peanut products.”
Peanut butter is leading peanut product in the U.S., followed by candies, and roasted/salted snacks, he says. “Major players are J.M. Smucker, which bought the Jif brand; Unilever, which was recently sold to Hormel, and we hope they will continue to promote the Skippy brand; and ConAgra, which has Peter Pan, also bought some house brands and is looking to expand. In the candy market, Hershey, Kraft, and M&M Mars are all major players, along with Nestle.
“We bring a lot of the buyers from these companies to peanut country each year and let them see firsthand how the product is grown and processed. This gives them an opportunity to get a feel for our industry and the high quality peanuts produced by our growers.”
Calhoun noted that Jeff Johnson, current Birdsong president, works with Peanut Institute to promote peanuts throughout the world and to include peanuts in humanitarian programs.
“The market today is very different than two or three months ago,” said Kris Lutt, president of Golden Peanut Company. “With the huge supply from the 2012 crop, prices were continuing to go down; we didn’t know where the decline would stop.
“Increased buying from China has been one of the factors that has helped to turn the market around. Domestic buyers then began to feel we had hit the bottom and that they needed to come into the market for some purchases.”
Domestic demand has been good, too, he says. “ One of the benefits of peanut prices coming down is that peanut butter manufacturers, candy manufacturers, and others are promoting their products and we’ve seen more peanut products coming off the shelves. That’s good for our industry.”
But he says, “We’ve still got a huge crop to deal with — a 3.5 million ton crop and only 2 million tons of shelling capacity. And dealing with some of the export markets can be a bit tricky. But we feel we’re heading in the right direction in being able to handle this export business.”