MARKET WATCH - FEBRUARY 2021

PEANUT CONTRACTS

Peanut buying points are reporting some action on peanut contracts. 
Farmers are having to watch other commodity prices along with some higher peanut contract prices. 
Here is a summary:

   SOUTHEAST - $475 per ton for runner type peanuts, each buying point has an allocation that has to be distributed to customers.
Premiums include additional $25 per ton for seed production, $25 or $50 per ton for High Oleic. 
Limits – Some contracts limit total to 50% of last year’s production.

                  Options – Runner Pool - $425 per ton now and dividends will be determined at the end of the season.

                   Mini-Max Runner Pool – Pool has $400 per ton minimum and $500 per ton Max – This week - $475 ton.

   VIRGINIA-CAROLINA - $520 per on Virginia type with limits/ $510 per ton on Virginia type.           
Some areas have $25 per ton premium for irrigated.

                  $475 per ton for runner type plus $25 for High Oleic, if available. $25 more per ton as a seed producer.

CROP SIZE

                USDA reports that U.S. peanut acreage in 2020/21 rebounded by 16 percent to 1.66 million planted acres.
Georgia alone accounted for 59 percent of the acreage increase.

                 In contrast, the national average yield declined to 3,796 pounds per acre from 3,934 pounds in 2019/20.
The combination raises U.S. production to 6.13 billion pounds (3,066,950 tons) and the third-largest harvest ever.
This is up 12 percent from 2019/20.
However, lower beginning stocks for 2020/21 would moderate the gain in total supplies.

                 USDA believes there is an good supply of peanuts available to support demand this season.
Growth in domestic use of peanuts is anticipated to increase 14 percent in 2020/21 to 4.87 billion pounds.
In contrast, 2020/21 peanut exports may decline moderately from 1.6 billion pounds in 2019/20 to 1.5 billion.
That would still represent the third-largest exports on record. Season-ending peanut stocks could end up 6 percent lower to 1.99 billion pounds, which will help provide support for prices.

                New numbers on supply have been posted and disappearance shows domestic food use up 3.4%. 
Exports declined from 804,000 tons to 750,000 tons, a 7.2% drop. 
At present, peanut usage is 7.6% (4 months) and exports are down 1.3% after 3 months. 
The industry will still facing a 1,138,000 ton ending stocks, per ERS/USDA. 

DOMESTIC MARKET

       December showed peanut usage continuing to rise. Shelled edible grade, season to date utilization, was UP almost 7.8% percent from last year.  Peanut stocks in commercial storage totaled 4.37 million lbs., down 5 percent.

                 Peanuts used in candy continued at a record pace, up 31%, peanut snack usage was UP 7.0% and even peanut butter showed a 4.7 percent increase and a 3.8% increase for the month. 
Government purchases are down 68% for the month and down 70% for the year as processors do not have ample time for peanut butter or roasted peanut production.  Utilization is up 8%. 

EXPORT MARKET

                China keeps buying U.S. peanuts. China is the leader of in-shell peanuts, up 67.4 % over last year(4 Mo). 
Shipments of raw shelled peanuts is down 22%, however China shipments are up 95% vs last Nov. 
Canada and Mexico led buying for raw-shelled and peanut butter. 
Exports of peanut butter are down 11.1% for first four months, but holding steady for November. 
Peanut exports are UP 3.7%, (4 Mo) and November is up 17% vs Nov 19.

                  In addition to the non-tariff barriers the European Union (EU) has imposed on U.S. peanut exports to Europe, the EU is now requiring a 25 percent tariff on peanut imports.  
The U.S. Peanut Federation has asked U.S. Trade Representative Robert Lighthizer and U.S. Department of Agriculture (USDA) Secretary Sonny Perdue to assist the U.S. peanut industry in resolving these trade issues with the EU.

                The EU imported nearly $180 million of U.S. peanuts and peanut products. Nearly all of these exports are in-shell and shelled peanuts. U.S. exports of which equaled $168 million in 2019.

POSITIVE MARKET TRENDS

                The USA peanut market has a firm undertone due to rising cotton and corn prices. Corn is over 5$/bushel and cotton for December 2021 on the Chicago exchange is 76.5 cts. These prices give farmers competitive alternatives to planting peanuts and farmers will want more money to contract peanuts for the 2021 crop. 

                Buyers remain quiet as good coverage has been taken for 2021 Calendar year and shellers are not aggressive to sell with higher prices looming.  Current crop prices range from the low to mid 50's raw basis. 
The dilemma for the sheller is paying the farmer a higher price if the buyers are unwilling to purchase at higher levels. 

               The PLC payment (Price Loss Coverage) is a perk that farmers don’t want to mention. The PLC payment is paid in October because of low prices last year(if the farm has a base).  Some believe that if shellers buy low, the government will pay more, as manufacturers and consumers are eventually the recipients of a nutritious products at an inexpensive price.  Estimated PLC payment is $115 per ton.   

LEADING MARKETING INDICATORS (As of February 1, 2021)

2020 Est. Peanut Acreage (+16%)              1,623,000 acres

2020 Est. Peanut Production (+12%)         3,066,950,000 tons

2020 Est. Yield per ACRE                           3,796 lb/ac

2020 Market Loan 02-2-2021                     2,424,184 tons

2020 Remaining in Loan (02-2-2021)        1,980,032 tons

2020-2021 Domestic Usage (5 Mo.)           UP + 7.8 %

2020-2021 Exports (Aug –Nov) 4 Mo.        UP + 3.7 %

Posted Price (01-7-2021)
    Runners -$424.55 ton
    Spanish - $415.57 ton
    Valencia and Virginias - $428.74