CRISIS COMING FOR TRUCKING
Larry Barton of Great West Casualty Company told members of the APC that the new rules governing trucking will cause a driver shortage and the industry needs to be aware. Truck drivers are being forced to record the hours they work. The new electronic logs are causing carriers to scramble to get loaded. If caught, it is a 10 hour penalty. The number one concern is a shortage of drivers – 48,000. The median age of truck drivers is 46.5 compared to 42.4 years 5 years ago. As Joe said, “As retirements are announced, there will be a need for thousands of drivers nationwide.”
Here are a few ideas to help the situation: 1) be appreciative of your driver, 2) be respectful, 3) provide a place for them to take care of personal needs and 4) thank them for what they do. Hugh Nall of Southern Ag Carriers in Albany has been warning the peanut industry for some time, especially the new sanitary transportation rules under the Food Safety Modernization Act.
WHAT A RIDE!
Friday, December 15, was the last day in the office for JEFF JOHNSON, President and Director of Marketing for Birdsong Peanuts as he officially retires on January 1, 2018. The peanut industry has been truly blessed with his altruistic leadership and dedication. Jeff has always expressed his pride and enthusiastic support for the industry and especially the product. He will be missed and his footprints will continue to provide a path to a bright future for the peanut industry. Thanks JEFF!
Peanut buying points report that lots of tons of peanuts are in the Marketing Loan program and have not been sold to the sheller. With the holidays approaching along with the end of the year, what should a farmer do? Some farmers failed to sign a contract last season and the entire crop remains in the Market Loan Program. Here are a few factors that might impact marketing decisions:
– Farmers have until January 31, 2018 to place peanuts in the Market Loan Program.
– Peanuts in the Market Loan can be stored for 9 months at which time the peanuts must be sold to a handler or forfeited to the government as farmer receives only the loan value.
– Offers: Some shellers off $20 per ton above the loan rate or about $375 per ton for un-contracted peanuts. (runners)
Another offer is a flex contract for unsold 2017 crop farmer stock. The base option IS $ 0.00 – $ 354.32 ton. The mediums price range is .45 minimum: 0.55 maximum, maximum the seller could collect is $ 135.00 ton. For each 0.01 per pound that the medium price exceeds 0.45, the seller is eligible to collect an additional $ 13.50 per ton. The current medium price reported is 0.46 pound. With the current $.46 per pound for mediums, contracts would be about $355 per ton plus $13.50 or $368.50 per ton. This contract will allow the farmer to ride with the market.
UNDERSTANDING THE EXPORT PEANUT MARKET
World peanut production totals approximately 29 million metric tons per year, with the U.S. being the world’s third largest producer, after China and India. Worldwide peanut exports are approximately 1.25 million metric tons. The U.S. is one of the world’s leading peanut exporters, with average annual exports of between 200,000 and 250,000 metric tons. Argentina and China are other significant exporters, while origins such as India, Vietnam, and several African countries periodically enter the world market depending upon their crop quality and world market demand.
Canada, Mexico, Europe, and Japan account for over 80% of U.S. exports. The largest export markets within Europe are the Netherlands, the U.K., Germany, and Spain.
Demand for peanuts in North America and Europe has been steady, although competition within a dynamic snack market continues to put pressure on peanuts to compete with a growing range of products (potato chips, extruded snacks, tree nuts, and baked snacks). In addition, quality specifications, food safety concerns and import requirements continue to require the implementation of improved monitoring and quality control standards at origin. In response to customer demands, U.S. producers, shellers and processors implement oversight and inspection procedures at each stage of production to ensure that the highest quality standards are achieved.
The American Peanut Council manages an export promotion program on behalf of the industry, and utilizes funds from the United States Department of Agriculture’s Market Access Promotion Program, as well as the Foreign Market Development Program. These funds are used primarily to focus on the trade, and are targeted to key markets. To learn more, visit the USDA’s Foreign Agriculture website at: http://www.fas.usda.gov/. (Source –APC)
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USDA COMMENTS ON PEANUT ESTIMATE
WHAT ABOUT THE CHINESE MARKET?
In MY17/18, China’s peanut production is forecast to hit another record at 17.5 MMT, up from the estimated 17 MMT in MY16/17. China’s official peanut production number is 17.29 MMT for MY16/17.
In its October report, CNGOIC maintained its previous forecast of MY17/18 production of 18.1 MMT based on a 4.2 percent acreage growth to 4.95 MHa. Driven by strong domestic demand for peanut products, peanut farming has been the most profitable crop in many peanut-producing provinces (namely Henan, Shandong, Hebei and Liaoning).
Peanut area is also partially boosted by the government’s reduced support for corn in these provinces since 2015. MOA’s October report indicated that the September weather conditions in most peanut-growing provinces remained good for peanut maturation and harvest. However, excessive rainfall was reported in part of Henan Province since late September likely impacting peanut quality.
However, some industry insiders have lower estimates for MY16/17 production. An independent source made a much lower production estimate of 10.8 MMT for MY16/17 and a forecast of 12 MMT for MY17/18. Industry traders speculate that during the past two marketing years, higher domestic peanut prices may be indicative of a lower actual peanut production than what is officially reported. That said, industry sources also report that the current peanut price hit the lowest level of the last five years. Correspondingly, peanut farmers’ income is expected to fall which then may impact peanut area and trade in the next year.
Anticipating a large domestic crop at a low price, MY17/18 imports are forecast at 250,000 tons, down from the estimated 300,000 tons for MY16/17. Peanut imports reached a record of 541,000 tons in MY15/16 primarily due to favorable prices for imported peanuts. Imports of peanuts for food use remain low due to sufficient domestic supplies.
U.S. PEANUT EXPORTS
Last year, China and Vietnam, purchased above 49% Jan-Sept. In 2017, that dropped to about 14%. Canada and Mexico are shining stars in the purchase of U.S. peanuts, Canada has 25.60% market share and Mexico has 23.31%. Sure hope that the NAFTA agreements continue in a positive manner for both buyers. The Netherlands came roaring back, after being down 28.8% last year, they have the biggest increase, up 47.6 % over last year. China is down 74% compared to last year, but the U.S. bumper crop could find a home in China. German, Japan and Norway posted positive growth.
PEANUT CONSUMPTION ON THE RISE
The peanut industry is off to a good start for the new marketing year which started in August. Peanut usage September vs September last year was up almost 8%. For the two-month period, the totals are up 3.1% with peanut butter volumes up 3.9% and candy use of peanuts up 6.4%. That is good news. Prices have dropped to the $.45-$.48 per shelled pound level and the quality is the best it has been in years. Now is a good time to bring on more promotions and campaigns and let’s prove we can sell more peanuts.
via Peanut Farm Market News, a peanut hotline service of The Spearman Agency, Tyron Spearman, editor