What’s good for the market might not always be good for farmers. Some peanut producers in the Southeast are discovering that this year, as peanut prices continue to improve for an increasingly disappointing 2010 crop.

“I’m hearing horror stories coming out of the Wiregrass region of southeast Alabama,” says Marshall Lamb, research director of the National Peanut Research Laboratory in Dawson, Ga. “I’ve heard that crop insurance is adjusting some fields and releasing them with six pounds per acre. Some farmers are digging peanuts, leaving them in the windrow, and baling them instead of picking them. It takes a lot of high yields to overcome that kind of negative production.”

Overall, yields likely will be well under 3,000 pounds per acre by the time everything shakes out, said Lamb, speaking at the Southern Region Agricultural Outlook Conference held recently in Atlanta.

“A lot of acreage probably will be abandoned, and all of this is due to extreme heat and late-season drought. From what I hear, the weather will work for our markets this time, though it hasn’t been good for a lot of our farmers,” he says.

Overall peanut supply as well as quality will be down for the 2010 production season, says Lamb. “As a result, prices are increasing. Farmers contracted a lot of peanuts at $450 per ton, but they were at $485 during the last week of September. It will be a tough year as far the returns for a lot of farmers and shellers, and processors will have a lot of problems handling this crop. This will carry forward into 2011, and it’ll be an interesting year,” says Lamb.

According to early reports, he says, quality will be adversely affected by weather conditions from this past season. “I’ve heard of some grades in the 50s. If you look at our loan schedule, we’re at break-even at a 72. Anything less than a 72 is a discount, and anything above 72 is a premium. We’re seeing very low grades, even on irrigated peanuts, and there are huge increases in early crop delivery on Seg. 2 peanuts, those that have excess damage. And a lot of that is being attributed to problems with the burrower bug,” he says.