In 2013, peanut growers in Georgia and the U.S. responded to lower peanut prices by shifting planted acreage to more cotton, corn and soybeans. The U.S. planted peanut acreage dropped 35 percent to a 99-year low of 1.07 million acres. Georgia dropped from 735,000 to 430,000 acres for a 41-percent decline, the lowest since 1917.
A record 3.38 million tons of peanuts were produced in 2012; 1.4 million tons were carried over into the current year. The acreage reduction this past year resulted in a total production drop of nearly 40 percent. New varieties such as Georgia 06-G resulted in second-best average yields for Georgia at 4,430 pounds per acre, and for the U.S. at 4,006 pounds per acre. Overall, U.S. growers produced a larger crop than expected, reaching 2 million tons. The large supply will keep prices down for peanuts.
U.S. peanuts are consumed domestically and in the export market. Domestic edible use is the top market for U.S. peanuts and represents between 55 and 65 percent of total use. Exports range from 15 to 20 percent of total use. Crush for oil and meal makes up 10 to 13 percent of use. The rest of total consumption is for seed.
Demand for peanut butter was slowed in 2012 when shelled peanut prices rose in response to a short supply before the record crop was produced. The effects carried over into 2013. However, candy and snack use of peanuts has grown. Exports also grew, as India had a shortage of peanuts in 2013 and briefly suspended exports to China.
China looked to the U.S. to fill a short-term shortage. That market is based on oil production, not edible kernels. Thus, low price is a major factor for China, and the timing was favorable for the U.S. China’s purchases helped reduce some of the surplus.
China purchased more than 70,000 tons, slightly more than the United States’ No. 1 export market, Canada. As quickly as China appeared in January 2013, it exited the market. India produced a large crop, and exports to China resumed.
Growth of domestic peanut use expected in 2013-14 will be led by candy and snack consumption. Peanut butter consumption should rebound, too. Domestic food use is projected to rise by 3 percent. Exports will fall back without China’s presence but still be strong in the traditional markets of Canada, the European Union and Mexico. Crush and seed/residual categories are expected to shrink; the net effect will be a drop in total consumption.
The outlook for 2014 is not much different than this time last year. The biggest difference from last year is the prices offered for other spring crops that compete for acres and are in rotation with peanuts. Corn, cotton and soybean prices are projected to be lower for 2014. Expansion of peanut acreage will need to be limited to avoid another carryover and lower prices.
Nathan B. Smith is a UGA associate professor and extension economist.
