Author: Wendiam Sawadgo

On January 31, 2025, the White House announced a 25% import tariff on products from Canada and Mexico that was set to take effect on February 1^st but was soon after delayed for one month. Before the pause, Canada announced retaliatory tariffs on several agricultural products including peanut butter. Then on February 10^th, the White House announced a 25% tariff on aluminum and steel imports, and the European Union responded with a list of products that could be targeted with retaliatory tariffs, also including peanut butter. The recent trade disputes raise the question of how U.S. peanuts could potentially be affected.

While the U.S. only produces about 5% of the world’s peanuts, it exports 14% of the world’s peanuts. In the 2023/2024 marketing year, 22% of the 3.27 million tons of peanuts that the U.S. produced were exported to other countries. In contrast, 58% of U.S. peanuts went to domestic food production. The U.S. also exports significant amounts of processed peanuts, including peanut butter, which totaled over $256 million in the 2023/2024 marketing year. Thus, while export markets are not the largest destination for U.S. peanuts, they are still a significant portion, and the U.S. is a major peanut exporter. 

Figure 1 shows the top destinations for U.S. exported peanuts and processed peanut products over the past five marketing years. Mexico has been the top export destination for raw U.S. peanuts each of the past three years, at an average of 147,000 tons of peanuts per year. Canada ranks second over the same period, at 112,000 tons, on average. In the 2023/2024 marketing year, the European Union had a 126% increase in peanut imports from the U.S., totaling 142,000 tons. Lastly, China was the largest peanut export destination from 2019-2021, but has decreased its peanut imports from the U.S. the past three years. Overall, Mexico, Canada, China, and the European Union account for 90% of raw U.S. peanut exports. In contrast, 57% of U.S. processed peanut exports have gone to Canada and Mexico over the past five marketing years. The European Union nearly quadrupled its imports of processed peanut products from the U.S. this past marketing year. In sum, any reduction of U.S. raw or processed peanut exports to Canada, Mexico, and the European Union could present challenges to the U.S. peanut industry.

Figure 1: U.S. Peanut Exports by Destination, Form, and Marketing Year (thousand tons)

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Sawadgo, Wendiam. “How Might Trade Disputes Affect the U.S. Peanut Industry?” Southern Ag Today 5(8.3). February 19, 2025. Permalink

As the 2024 peanut harvest wraps up, peanut prices remain relatively stable compared to prices of other crops. Corn, soybeans, cotton, wheat, and rice have had significant price decreases since the 2022/23 marketing year, while peanut prices have experienced only a slight decrease over that period. Peanut prices are projected to average $530 per ton for the 2024/25 marketing year, just below the $536 and $538 per ton observed for the 2022/23 and 2023/24 marketing years, respectively. This price stability comes as peanut ending stocks have remained low and stable, which is expected to continue into the 2024/25 marketing year.

Figure 1: Peanut Production, Disappearance, and Ending Stocks by Year

Peanut production is expected to increase in 2024, driven by the 10% increase in planted acreage. If current USDA projections are realized, peanut production would total 3.3 million tons, an 11% increase from 2023, as shown in the orange line of figure 1. Georgia leads the way with an expected 1.65 million tons of peanut production, followed by Florida (297,850 tons), Alabama (297,600 tons), and Texas (262,500 tons). The increased nationwide production comes despite a projected U.S. peanut yield of just 3,723 lb. per acre, which is 1.4 percent below the 2023 yield and the lowest yield since 2016. 

On the demand side, peanut disappearance is projected to keep pace with the increased production, as shown by the bars in Figure 1. Peanuts processed for domestic food products, which account for about half of U.S. peanut disappearance, are expected to increase by 1% to 1.58 million tons. Peanut crush is expected to increase by 22%. In contrast, exports are forecast to decrease by 18% to 600,000 tons. As a result of the strong production, ending stocks are expected to increase to 823,000 tons, but this would still be the second lowest total since 2016. Overall, these tight supplies may suggest that peanut prices remain favorable next year. Despite the relatively favorable peanut price situation, peanut profitability remains a major concern due to the elevated production costs identified in the article titled “The Long Term Economic Struggles of Southern Peanut Farmers.”

Sources:

USDA Economic Research Service. Oil Crops Outlook: November 2024. Available at: https://www.ers.usda.gov/publications/pub-details/?pubid=110380

USDA. Peanut Stocks and Processing: November 25, 2024. Available at: https://usda.library.cornell.edu/concern/publications/02870v87z

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Sawadgo, Wendiam. “Peanut Stocks Expected to Remain Low in 2025.” Southern Ag Today 4(49.3). December 4, 2024. Permalink

USDA released its latest World Agricultural Supply and Demand Estimates (WASDE) on June 12^th. This report follows the first set of estimates for the 2024/2025 crop marketing year that were released in May. This month’s report continues to use the March Prospective Plantings report as the basis for estimated acreage. As a result, there were no changes to the production or price projections for most crops, with wheat and cotton the exceptions as shown in table 1.

Table 1: WASDE Estimated and Projected Prices 5 by Crop and Marketing Year

Cotton’s 2024/2025 marketing year average price is a projected $0.70/lb., which represents a $0.04/lb. decrease from last month’s projection. This change was driven by a 0.45 milllion bale increase in the estimated cotton stocks at the start of the marketing year, bringing estimated stocks up to 2.85 million bales. The revision to beginning stocks was due to a halfmillion bale reduction in expected U.S. cotton exports during the 2023/2024 marketing year. While global demand for cotton remains strong, U.S. cotton export sales have been slower than expected amid tight supplies, and Brazil is expected to overtake the U.S. as the top cotton exporter for 2023/2024. If realized, this would mark the first time since the 1992/1993 marketing year that the U.S. would not be the world’s top cotton exporter. As a result of reduced exports, U.S. cotton stocks are projected to increase to 4.1 million bales at the end of the 2024/2025 marketing year. 

On the other hand, the projected 2024/2025 marketing year U.S. wheat price increased by $0.50 to $6.50/bu. This price increase is due to a 25 million bushel increase in projected exports this coming marketing year, in spite of a slight increase in projected U.S. wheat yields and soft harvest-time prices in the United States. The increase in U.S. exports follows a 1% decrease in projected global wheat production because of yield reductions for major wheat exporters Russia, Ukraine, and the European Union. The decreased global yield projections were driven by dry weather in Russia and Ukraine, late-season frosts in Russia, and excessive precipitation in France.

Looking ahead, we should expect to see more significant changes in next month’s WASDE report. On June 28^th, USDA is scheduled to release the Acreage report, which will likely result in adjustments to acreage planted and harvested estimates for most row crops. These updated acreage estimates will affect projected production and be taken into account in the July WASDE report.

References

Biram, Hunter, and Ryan Loy. “May WASDE Projects Higher Supplies and Lower Prices Again in 2024.” Southern Ag Today 4(20.1). May 13, 2024. Available at: http://southernagtoday.org/may-wasde-projects-higher-supplies-and-lower-prices-again-in-2024/

USDA-NASS. World Agricultural Supply and Demand Estimates. June 12, 2024. Available at:  https://www.usda.gov/oce/commodity/wasde/wasde0624.pdf

USDA-FAS. Cotton: World Markets and Trade. June 12, 2024. Available at:  https://downloads.usda.library.cornell.edu/usda-esmis/files/kp78gg36g/xk81m8188/xs55p371r/Cotton.pdf

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Sawadgo, Wendiam. “June WASDE Report Projects Increases to Wheat Prices, Decreases to Cotton Prices.” Southern Ag Today 4(25.1). June 17, 2024. Permalink

The USDA released 2023 production estimates in January showing U.S. peanut yields down 7% from 2022 at 3,740 lbs. per acre. As shown in figure 1, the majority of states’ peanut yields declined in 2023, relative to the previous year. The major peanut producing states of Alabama and Florida both saw 17% decreases in their yields. Georgia – the leading state – had a 3% decline to 4,070 lbs. per acre. Yields were down in 2023 largely due to the drought that persisted in the South throughout the latter part of the peanut growing season. Arkansas led the way with its record-high yield of 5,800 lbs. per acre, in part due to most of the state’s peanuts being irrigated.

Figure 1: 2023 Peanut Yield by State and Percent Change from 2022

Putting into context where this year’s yield falls historically, let’s look at peanut yield trends since 1970 (figure 2). The 2023 yield is the lowest since 2016. Over the entire 1970-2023 period, peanut yields increased by 36 lbs. per acre annually, on average, but with considerable variation. From 1970 to 2000, peanut yields increased by an average of 7 lbs. per year. Then in 2001, peanut yields reached 3,000 lbs. per acre for the first time, and over the subsequent decade, peanut yields would increase by 57 lbs. per year on average. This substantial increase from 2001-2012 is likely driven by the introduction of the Georgia-06G high yielding runner-type peanut cultivar that was released in 2006 and soon gained a significant market share in the southeast. In 2012, peanut yield surpassed 4,000 lbs. per acre for the first time. However, over the past 12 years, peanut yields have been flat and averaged 3,948 lbs. per acre. In fact, the 2012 mark has yet to be topped. 

Figure 2: US Peanut Yield Trends

Peanut yields are an even more critical aspect for profitability due to increased input prices. Production costs are expected to remain elevated in 2024 at $598 per ton, assuming yields equal the five-year average. This means that even with peanut prices expected to reach a decade-high $550/ton, producers would still likely operate at a loss. Strong yields would help lower these breakeven prices, but the recent yield volatility raises concerns that this might not occur.

References

Rabinowitz, A. “Peanut Cost of Production, the Farm Bill, and Need for Risk Management.” Southern Ag Today. January 8, 2024. Available at https://southernagtoday.org/2024/01/08/peanut-cost-of-production-the-farm-bill-and-need-for-risk-management/

USDA-NASS. Crop Production Annual Summary. January 12, 2024.

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Sawadgo, Wendiam. “Peanut Yield Trends.” Southern Ag Today 4(13.1). March 25, 2024. Permalink

As we proceed through the 2023/2024 marketing year, crop prices are expected to decrease generally compared to the previous marketing year. While prices of corn, cotton, soybeans, wheat, sorghum, and rice are expected to drop this marketing year, peanut prices are expected to increase to a marketing-year average of $550 per ton, reaching their highest level in over a decade according to the USDA (Figure 1). This would be the fourth straight year of increased peanut prices and a $14 per ton increase from 2022/2023. While the other crops are seeing increases in their ending stocks, peanut stocks look to remain stable. 

Figure 1: Peanut Prices by Marketing Year

On the production side, yields are projected at 3,740 lb. per acre, which would mark the lowest level since 2016. This would fall well below the 10-year average of 3,942 lb. per acre. Severe drought in 2023 across the predominant peanut-producing regions of Alabama and Florida — two of the top-four peanut-producing states— has led to forecasted 24% and 26% yield decreases compared to 2023 for those two states, respectively. This comes in a year that was expected to achieve a significant boost in peanut production, due to a 16% increase in planted acres. Now, peanut production is only projected to increase by 8% over last year and reach 2.99 million tons.

Accompanying the bullish production estimates, peanut demand is also looking strong. This is driven by a 4.5% projected increase in peanut exports and a 3.7% increase in domestic food use. If production and disappearance projections are realized, this would mean carryover at the end of the 2023/24 marketing year would remain almost unchanged at 1.02 million tons, providing support for continued strong peanut prices. 

Figure 2: Peanut Production, Disappearance, and Ending Stocks by Year

Sources:

USDA Economic Research Service. Oil Crops Outlook: November 2023. Available at: https://downloads.usda.library.cornell.edu/usda-esmis/files/j098zb08p/8g84p626f/hx120116v/oiltables.xlsx

USDA. World Agricultural Supply & Demand Estimates: November 2023. Available at: https://www.usda.gov/oce/commodity/wasde/wasde1123.pdf

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Sawadgo, Wendiam. “Why are Peanuts Bucking the Declining Crop Price Trend?” Southern Ag Today 3(49.1). December 4, 2023. Permalink