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www.caes.uga.edu/departments/agecon/extension/agoutlook/
Peanut Situation & Outlook Southern Outlook Conference Atlanta, GA September 22, 2008 Nathan B. Smith, Amanda R. Smith
Current Situation • Improved Production Prospects
– 2007 production 1.87 M tons, 8% higher than 2006. (Federal State Inspection Service shows 1.81 M tons inspected) – 2008 production estimate pegged at 2.38 million tons, 3rd largest on record if realized. – US Acreage is up 25% in 2008
• Stocks down from this time last year: – – – –
Farmer stock peanuts in storage are down 52%, Shelled stocks are down 16%, Roasting stock up 37% and Oil stocks are up 18%.
• Exports increasing, up ~60% from 2005. • Domestic food use projected to increase less than 1%.
Peanut Planted Acreages 2004
2005
AL
200
FL
(1,000 acres)
2006
2007
2008*
225
165
160
195
145
160
130
130
145
GA
620
755
580
530
685
MS
-
15
17
19
22
SC
35
63
59
59
71
SE
1000
1218
951
898
1118
NM
17
19
12
10
8
OK
35
35
23
18
19
TX
240
265
155
190
255
SW
292
319
190
218
282
NC
105
97
85
92
99
VA
33
23
17
22
24
V/C
138
120
102
114
123
US
1,430
1,657
1,243
1,230
1,533
*Source: NASS Crop Production Report, Sept 12, 2008
Peanut Yields 2005
2006
2007
2008*
AL FL GA MS
2750 2700 2840 3200
2500 2500 2780 2900
2600 2700 3150 3300
3000 3100 3150 3300
NM NC OK
3500 3000 3270
3600 3200 2850
3500 2800 3400
3500 2900 3800
SC TX
2800 3750
3000 3550
3100 3950
3400 3500
VA
3000
3200
2700
2900
US
2989
2863
3130
3188
Source: NASS Crop Production various issues, *September Estimate
US Peanut Yield
Lbs/Acre
(1978 - 2008)
3,500 3,250 3,000 2,750 2,500 2,250 2,000 1,750 1,500
3,159
78
80
82
84
86
88
90
92
94
Year US
96
98
3188
'00 '02 '04 '06 '08
Total US Peanut Supply 4000 3500
1,000 Tons
3000 2500 2000 1500 1000 500
Production
Imports
Ending Stocks
2007 Estimate 1.1% decrease in US acreage, 3,130 lb yield, 2.151 M tons use 2008 Forecast 25% acreage increase, 3181 lb yield, 2.260 M ton use
'08 For
'07 Est
'06
'05
'04
'03
'02
'01
'00
99
98
97
96
95
94
93
92
91
90
0
Peanut Disappearance by Use 3000
2000 1500 1000 500
Food Use Crush Production
'0 '05 6 E '0 st 7 '0 For 8 Pr oj
'0 4
'0 3
'0 2
'0 1
'0 0
99
98
97
96
95
94
93
92
91
0
90
1,000 Tons
2500
Exports Seed, Shrink, Resid Carryover
Shelled Edible Use in Primary Products 1,000 lbs
Candy
Aug 07’ to Jul 08’
% Diff from 06/07
425,166
+ 2.4%
1,012,263
+ 1.9%
Snacks
320,467
- 14%
Total
2,141,552
- 1.6%
150,204
- 2.3%
Peanut Butter
In-Shell
US Peanut Exports 1200 1000
M lbs.
800 600 400 200
Crop Year
Exports = 18% of total disappearance in 2008
'0 8
'0 6
'0 4
'0 2
'0 0
98
96
94
92
90
0
Input Costs on the Rise Prices Paid Indices by Sub-Component
675
1990-92 = 100
575 475 375 275 175 75 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Nitrogen Supplies & Repairs
Diesel Herbicides
Potash & Phosphate Insecticides
Wage Rates Fungicides
Impact of Fuel & Fertilizer Prices on Cost of Crop Production ($/acre) $700 $600 $500 $400 $300 $200 Cotton
Peanuts 2002
* Does not account for changes in technology.
Corn 2008
Soybeans
Non-Irrigated Crop Comparison September 9, 2008
SUMMARY OF 2008 SOUTH GEORGIA CROP ENTERPRISE ESTIMATES Conventional Tillage By Amanda R. Smith, Nathan B. Smith and W. Don Shurley, UGA Extension Economists, Department of Agricultural & Appl
EXPECTED YIELD CURRENT PRICES GROSS RETURN TOTAL VARIABLE COSTS RETURN ABOVE VARIABLE COST TOTAL SPECIFIED FIXED COSTS
BR Cotton 700 $0.610 $427 $430 ($3) $138
TOTAL COST EXCL. LAND & MGT RETURN TO LAND AND MGT
$568 ($141)
Peanuts 2,700 $500.00 $675 $533 $142 $140 $673 $2
NON-IRRIGATED RR RR Grain Corn Soybeans Sorghum Wheat 85 30 65 55 $5.00 $10.50 $4.50 $4.00 $425 $315 $293 $220 $304 $222 $238 $189 $121 $93 $54 $31 $57 $53 $54 $37 $361 $64
$274 $41
$293 ($0)
$226 ($6)
BREAKEVEN PRICE $0.81 $498.40 $4.24 $9.15 $4.50 BREAKEVEN YIELD 931 2,691 72 26 65 * As of April 21, 2008 Fertilizer Prices per Pound of Nutrient were as follows: N=$0.60, P=$0.70, K=$0.50 ** Calculated using a Diesel Fuel Price at $4.00 Gallon *** Assuming Diesel Irrigation. Electric is estimated to be 45% of the cost of $4.00 Diesel Irrigation
$4.11 56
Irrigated Row Crop Comparison September 9, 2008 SUMMARY OF 2008 SOUTH GEORGIA CROP ENTERPRISE ESTIMATES Conventional Tillage By Amanda R. Smith, Nathan B. Smith and W. Don Shurley, UGA Extension Economists, Department of Agricultural & Applied
EXPECTED YIELD CURRENT PRICES GROSS RETURN TOTAL VARIABLE COSTS RETURN ABOVE VARIABLE COST TOTAL SPECIFIED FIXED COSTS
BR Cotton 1,100 $0.610 $671 $582 $89 $232
TOTAL COST EXCL. LAND & MGT RETURN TO LAND AND MGT
$814 ($143)
Peanuts 3,700 $500.00 $925 $677 $248 $237 $914 $11
IRRIGATED RR Grain Int Mgmt Corn Soybeans Sorghum Wheat 185 55 100 75 $5.00 $10.50 $4.50 $4.00 $925 $578 $450 $300 $657 $316 $333 $306 $268 $261 $117 ($6) $164 $147 $149 $59 $822 $103
$464 $114
$482 ($32)
$365 ($65)
BREAKEVEN PRICE $0.74 $494.31 $4.44 $8.43 $4.82 BREAKEVEN YIELD 1334 3,658 164 44 107 * As of April 21, 2008 Fertilizer Prices per Pound of Nutrient were as follows: N=$0.60, P=$0.70, K=$0.50 ** Calculated using a Diesel Fuel Price at $4.00 Gallon *** Assuming Diesel Irrigation. Electric is estimated to be 45% of the cost of $4.00 Diesel Irrigation
$4.87 91
Outlook • Current prices favor peanuts compared to cotton and corn (dryland). • Bumper crop will cause prices to back off of $500 per ton at harvest. • 2009 plantings will depend on contracts: – Growers are saying will take $600+ per ton price due to higher input costs, – However, growers will be tempted to grow, same or more peanuts if cotton does not rally, – Should consider the possibility of $355 per ton on non-contracted peanuts if have record crop.
Crop Rotations
(GPAC % Growers Applied) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2004
2005 Corn
Cotton
2006 Crn/Ctn
2007 Other
Years Between Peanut Crops (GPAC % Growers Applied)
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2004
2005 < One
Two
2006 Three
Four
2007 > Four
Tillage (GPAC % Growers Applied)
Bottom plow Disc harrow Field cultivator Rip & Hip V-Ripper Hydro-Till Rototill/Tillovator
2004 2005 2006 2007 75 88 67 62 50 69 67 67 38 63 50 29 13 6 10 6 6 6 8 19 25 19 10
Conservation Tillage (GPAC % Growers Applied) 20% 15% 10% 5% 0% 2004
2005 Stip Tilled
2006 No Tilled
2007
2008 Farm Bill Subtitle C - Peanuts • Peanuts were able to remain a separate title (distinguished from “covered commodities”) • Maintains a separate payment limit for peanuts – $40,000 Direct Payment Limit – $65,000 Counter-Cyclical Payment Limit
• Direct Payment same at $36/ton • Target Price same at $495/ton • Advances and timing of DCP same as “covered commodities” • Payment level changes to 83.3% for 2009-2001
Peanut Market Assistance Loans • $355 National Loan Rate • 9 month loan beginning first day of the first month in which loan is made. • Marketing loan may be obtained thru: – FSA county office, – Designated Marketing Association, – or Cooperative Marketing Association
Marketing Loan Changes • Change in Storage, Handling and Associated Cost Rules
– Handling and associated costs (other than storage) will be paid by the Secretary (CCC) incurred at the time peanuts are placed under loan to be repaid at redemption of peanut loan. – Pay for storage, handling, and other associated costs for all forfeited.
• Adjustments of loan rates? “The Secretary may make appropriate adjustments in the loan rates for peanuts for differences in grade, type, quality, location, and other factors.”
USDA Proposal • White paper sent out to peanut industry proposing to adjust loan rates by type to reflect price differentials by type. • Based on NASS prices since 2005 would result in lowering the 2007 loan rate for runners from $355 to $348 per ton. – Also would raise virginia ($382) & spanish ($377)
• Looking a phasing in the loan differentials beginning with 2009 crop.
Peanut Stewardship • Peanut eligible under new CSP program for stewardship payments for “adopting” a resource-conserving rotation (4-year?). • 5-year contract. • Originally proposed as PERS program for peanuts.
4000
800
3500
700
3000
600
2500
500
2000
400
1500
300 200
1000
100
500
0
0
Year Cotton
Peanut
Peanut Farmer Stock Lb/Acre
900
19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07
Cotton Lint Lb/Acre
Georgia Cotton & Peanut Average Yield: 1990-2007
Georgia 7 Major Row Crops Planted Acres* (1,000 Acres)
2003 Corn 340 Cotton 1300 Peanuts 545 Grain Sorghum55 Soybeans 190 Tobacco 27 Wheat 380 Total 2837
2004 335 1290 620 45 280 23 330 2923
2005 270 1220 755 40 180 17 280 2762
2006 280 1400 580 40 155 17 230 2702
2007 2008? 510 435 1030 950 530 625 65 75 285 400 20 17 360 480 2800 2982
*Source: NASS Crop Production, Various Issues, UGA Preliminary Estimate
US Dollar Index
Total Cost of Crop Production, 2002 and 2008 ($/acre) Fixed Costs
Variable Costs
$1,000 $800 $600 $400 $200 $0
Cotton
Peanuts
Corn
Soybeans
2002 2008 2002 2008 2002 2008 2002 2008
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