Author: Wendiam Sawadgo

With the peanut harvest set to begin, USDA-NASS released the first set of forecasts for this year’s crop in the August Crop Production report. U.S. peanuts are expected to yield 4,129 lb. per acre, which would about equal the value from 2021. Predictions for the top-four peanut states are mixed, with record or near-record yields projected in three states. Georgia – the leading peanut producer – is expected to yield 4,500 lb. per acre, which would be its highest value since 2012. Alabama and Florida are forecast to yield 4,000 lb. and 4,300 lb. per acre, respectively. If realized, this would tie Alabama’s 2012 record and beat Florida’s 2014 mark of 4,000 lb. per acre. On the other end of the spectrum, Texas – mired in severe drought – has a forecasted yield of just 2,100 lb. per acre, which would be its lowest value since 1995. 

One question to consider is whether the August forecast will equal the yield calculated at the end of the year. As shown in the figure, the August forecast has exceeded the final calculated yield in each of the past eight years, amounting to an average overestimate of 172 lb. per acre per year. Peanut crops with high yield potential have often seen their fortunes turn due to tropical storms and other weather-related issues across the South. Therefore, it is important to remember that these yield estimates could change before harvest.

If the current yield estimates are realized, total U.S. production would fall by 3% this year to 3.1 million tons driven by the lower planted (and expected harvested) acreage, as shown in the table. In total, 97% of the 1.54 million planted acres in the U.S. are expected to be harvested this year. Among the top-producing states, only Alabama is expected to see an increase in harvested acres, with the top-four states projected to see forty thousand fewer acres harvested than last year. Overall, this slight decline in production should not have too much of an impact on the peanut market. It would likely take larger abandonment or a sizeable yield decline to see a significant effect on the market given the existing peanut stocks.

Forecasted Peanut Production and Harvested Area for Top-producing States and U.S. Total, 2022 vs. 2021

Sources:

USDA National Agricultural Statistics Service. 2022. “Crop Production.” August 12, 2022. Available at: https://downloads.usda.library.cornell.edu/usda-esmis/files/tm70mv177/n5840309g/2n49v849f/crop0822.pdfUSDA National Agricultural Statistics Service. 2022. “Acreage.” June 30, 2022. Available at: https://downloads.usda.library.cornell.edu/usda-esmis/files/j098zb09z/0z70b374s/w9506686w/acrg0622.pdf

Sawadgo, Wendiam. “2022 Peanut Production Projections“. Southern Ag Today 2(36.1). August 29, 2022. Permalink

Consumption of shelled peanut products has been strong through the third quarter of the 2021/2022 peanut marketing year (which began in August 2021). Ninety percent of peanuts produced in the U.S. are sent to shelling processors and end up being manufactured into food products or crushed for oil. Thus far, disappearance of the old crop is outpacing levels from previous marketing years. As shown in Figure 1, peanuts crushed for oil are at 218 million pounds this marketing year (through April), outpacing the same timeframe during the 2020/2021 marketing year by 5.8%. This marks a third consecutive year of increased peanut crude oil disappearance. Other U.S. oilseed crops such as soybeans have seen record oil crushings this year. This is likely an effort to offset disruptions to vegetable oil markets caused by the Russian invasion of Ukraine, which has led to reduced sunflower production by Ukraine, the world’s leading sunflower producer and sunflower-oil exporter. 

Similarly, disappearance of peanut food products has increased by 14.8% to start the marketing year compared to the same period last year, at 2.4 billion pounds. This follows relatively small changes each of the previous three years. The higher disappearance on the food side has been primarily driven by increases in peanut food used for candy production, which is up 15.4% compared to last year. Usage for peanut butter and peanut snacks are down 1.5% and 5.8%, respectively, from last year, continuing the trend observed over the first quarter of this marketing year.

As we inch closer to the 2022 peanut harvest, it is unlikely that the increased peanut usage this marketing year will have a significant change on peanut stocks. This is because the 2021 harvest saw a 4% increase in peanut production, enough to meet this year’s high disappearance. Peanut production might also fall this year due to the lower projected planted acres, but the upcoming publication of the USDA Acreage report will provide more information at the end of the month.

Sources:

USDA National Agricultural Statistics Service. 2022. “Fats and Oils: Oilseed Crushings, Production, Consumption and Stocks.” June 1, 2022. Available at: https://www.nass.usda.gov/Publications/Todays_Reports/reports/cafo0622.pdf

USDA National Agricultural Statistics Service. 2022. “Peanut Stocks and Processing.” May 25, 2022. Available at: https://downloads.usda.library.cornell.edu/usda-esmis/files/02870v87z/z603s454w/m900pz82z/pnst0522.pdf

Sawadgo, Wendiam. “Shelled Peanut Product Disappearance Increasing“. Southern Ag Today 2(26.1). June 20, 2022. Permalink

Peanut production was up 4% in the United States in 2021, compared to 2020, as shown in Table 1. This was driven by strong yields nationwide of 4,135 lbs. per acre, just off the 2012 record of 4,211 lbs. per acre. Georgia – the largest peanut producing state – saw a 2% increase in production. This pushed the U.S. average up, as Georgia produces about half of the nation’s peanuts. The increased production comes despite a 5% decrease in peanut planted acreage nationwide. All three main peanut production regions saw declines in acreage, with the Southeast seeing a 5% decline driven by Georgia’s 7% dip.

Table 1. U.S. Peanut Production (thousand tons)

The strong production, however, has been combined with decreased use that is expected to increase peanut stocks. Peanut use is expected to decline by 4% this marketing year, primarily due to a 5% forecasted decrease in exports. However, food disappearance is expected to increase by 1% from 2020. Increases in consumption of peanut butter (5%), peanut candy (4%), and peanut snacks (3%) drove the domestic peanut food demand increase during the 2020-2021 marketing year, as shown in Figure 1. The peanut butter consumption increase follows the similar-sized increases observed the previous year, as demand has increased throughout the COVID-19 pandemic. Peanut stocks are expected to increase by 5% to 1.1 million tons, which is still a manageable level for the industry.

  Figure 1. U.S. Peanut Food Consumption by Product and Marketing Year

Sawadgo, Wendiam. “Peanut Production Up in 2021 Despite Lower Acreage“. Southern Ag Today 2(13.1). March 21, 2022. Permalink

Peanuts are a predominant Southern crop, with Georgia, Alabama, Florida, and Texas – the top four states in 2021 planted acreage – accounting for over four-fifths of the area planted nationwide. Peanut acreage declined by 5% to 1.58 million planted acres in the US in 2021. This year’s peanut production is projected at 3.15 million tons, which would be a 2.2% increase above 2020. This forecast increase in production comes despite the decreased acreage planted and is driven by a projected 7.7% increase in yield over 2020, to 4,105 pounds per acre.

Figure 1: 2021 Planted Peanut Acreage; Data source: USDA-FSA

The strong peanut demand from the 2020/2021 marketing year is expected to continue and meet production this current marketing year. However, peanut stocks are expected to remain plentiful, above 1 million tons, a slight increase from last year. Prices for the 2021/2022 marketing year are expected to increase to $430/ton. The long-term outlook, as forecast by the Food and Agricultural Policy Research Institute (FAPRI), expects prices to remain in a similar range moving forward. 

Figure 2: Past and Projected Peanut Prices by Marketing Year; Data sources: USDA-NASS and FAPRI-MU U.S. Agricultural Market Outlook (2021)

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Sawadgo, Wendiam. “Peanut Outlook.” Southern Ag Today 1(49.1). November 29, 2021. Permalink