Spearman, who is about as involved in the peanut industry as it’s possible to be, from reporting on production and marketing, to buying and selling peanuts, says in 2012 too many growers saw too many dollar signs, and they simply planted too many peanuts.

“The USDA says we have about 3 million tons, and it takes 300,000-450,000 tons to fill the pipeline.

“They think we will have a million ton surplus from the 2012 crop. If those numbers turn out to be accurate, we need to grow half the peanuts we grew two years ago,” Spearman says.

In 2010, peanut acreage in the U.S. was down to 1.2 million acres and in 2011 acreage dipped again to less than 1.1 million acres.

The drop in acreage did not come in tandem with a drop in production in either year, which contributed to the false sense of a shortage of peanuts and perhaps to high peanut contracts and even higher prices for peanuts bought from the Federal loan program.

In 2012, growers planted about 1.5 million acres and appear headed toward one of the highest yield per acre totals on record.

If all these ‘perfect storm’ economic and production factors play out, U.S. peanut producers may need to plant the fewest acres of peanuts in the past 20 years to get supply and demand back in synch.

For 2013, Spearman says, “We’re going to have enough peanuts to carry us 6-7 months into the growing season. So, we will need to grow a big enough crop to meet a 5-6 month demand. How much we will need to fill that 5-6 month supply, we don’t know.”

“We are going to need some peanuts next year and the high value of corn and soybeans is going to have an impact on the price of these peanuts.

“The big question is how many we are going to need. For growers who are dependent on peanuts for a rotation crop and/or are committed to growing peanuts for a co-op, they will have some hard decisions to make at planting time next year, Spearman says.

“On the positive side for peanuts, demand remains good. Traditionally, when peanut prices come down demand for peanuts goes up.

“The demand for peanut butter, in particular, remains very strong. And, the National Peanut Board and other peanut-based organizations do an outstanding job of promoting peanuts, so there is hope that we will deplete the current supply faster than we expect,” he adds.

“Right now, I’m telling everybody I know — eat more peanuts, send peanuts for Christmas presents, send raw peanuts for cooking. We’ve got plenty of peanuts and the price is right,” Spearman says.