Peanut Market News – September 2, 2016

PEANUT STANDARDS BOARD APPROVES CHANGE ON SEG.2’s

The Peanut Standards Board has voted to raise the grading score used to classify farmer stock peanuts as SEG 2’s from 2.49 percent to 3.49 percent. This effort will benefit American peanut farmers who have been affected by having their crop graded as Segregation 2. The Georgia Peanut Commission and the Georgia Farm Bureau applaud the efforts.

The Peanut Standards Board, authorized under the Farm Security and Rural Investment Act of 2002, consists of 18 members representing the peanut growing regions of the U.S. The United States Department of Agriculture consults with the board to establish or change quality and handling standards for domestically produced and imported peanuts.

The revisions are necessary due to the changes made in the 2002 Farm Bill’s peanut provisions. There were significant changes made in moving from the old quota program to the current peanut program but the definitions of Segregation 1, Segregation 2 and Segregation 3 for farmer stock peanuts were not changed. However, the definition for what farmer stock peanuts could be used in the domestic edible channel was changed.

A farmer having a majority of their crop graded as Segregation 2 is an economic devastation which could lead to bankruptcy while the true value seems to be significantly higher,” says Armond Morris, chairman of the Georgia Peanut Commission. “Based on the tonnage of the peanut crop, potential value and current use of Segregation 2 peanuts in the edible market, a re-examination of what constitutes a Segregation 2 peanut and the associated loan value is prudent.”

From a nationwide perspective, Segregation 2 peanuts usually constitute less than 1 percent of the entire U.S. crop. Peanut growers, however, have experienced some very challenging weather conditions in recent years, especially with rain at harvest time, which has increased the percentage of peanuts being graded as Segregation 2s. This adjustment to the grading score will not affect the quality of peanuts being delivered to the market.

Georgia Farm Bureau is grateful the Peanut Standards Board recommended adjusting the percentage used to grade incoming farmer stock peanuts as Segregation 2. This change will create a more accurate value for growers when their peanuts grade Segregation 2,” says Georgia Farm Bureau President Gerald Long. “We urge USDA to move forward with the Peanut Standards Board request.”  The recommendation from the Peanut Standards Board will now be taken under consideration by the U.S. Department of Agriculture.  A committee has also been appointed to review eliminating Segregations.

 

PAYMENTS ON 2015 PEANUT BASE

USDA has declared the national average price of peanuts for the marketing year 2015 was $386 per ton ($.19.3/lb).  The Farm Bill provides that the reference price for peanuts is $535 per ton ($0.2675/lb).  To obtain the PLC payment amount deduct the average price from the reference price and that is the peanut PLC payment of $149 per ton ($0.0745/pound)

Congress passed the Budget Control Act of 2011 and the reconciliation reduction (sequestration) was 6.8 percent last year.  Payment applied to 85% of the farm’s base acres.  Payments should be received in October.

 

RESTRICTED CHEMICAL USE ON PEANUTS

Shellers have cautioned farmers not to use any chemicals that has the following: Propiconazole (PPZ), Monopotassium Salts, Dipotassium Salts or Phosphorous Acid.  The use of these products on peanuts may leave a residual that can cause rejection of peanut products by the European Union or other customers.  Shellers are making every effort to ensure that the U.S. has acceptable product for global consumers.  Click HERE for more information.

 

ANDALUCIA NUTS OPENS NEW STATE OF THE ART NUT BUTTER PLANT IN PLAINVIEW, TEXAS

Andalucia Nuts has announced the nut butter plant that opened in phases back in March 2016 is now in full production. The plant is located in the city of Plainview, TX, north of Lubbock.

The west plant is setup to process large volumes of nut butters along with flavored, roasted and manufactured peanuts and other tree nuts.  The company supplies various major retailers worldwide, as well as leading foodservice organizations and major food processors. Andalucia Nuts has other locations in Atlanta, GA, and Houston, TX.  More information on Andalucia Nuts can be found at www.andalucianuts.com

 

U.S. PEANUT EXPORTS

Earlier in the season, farmers were warned to sure that a federally approved peanut warehouse be available before harvest because excess peanuts may prevent a farmer from getting a loan.  Then China decided they needed more peanuts and set records on purchases of U.S. peanuts.  This chart clearly shows what has caused the American peanut industry to change. 

China and Vietnam have become the top buyers accounting for 52.4% of U.S. peanut sales through April.  The big surprise was the container shipping of farmer stock peanuts in bulk directly to oil mills.  Of course, problems in South Africa and Argentina opened the door for U.S. peanut exports into the Chinese market. 

Canada, usually #1 in peanut purchases dropped to third, but still a strong 14.2% market share.  Mexico was also strong with a 13.1% market share.  The Netherlands was only 3.46% of U.S. shipments, but 4ppb on aflatoxin has been difficult for U.S. shellers to deliver.  Buyers need to watch the harvest of the USA, China and India very closely.

One broker said, ‘We are now seeing the results of peanut crop difficulties in other parts of the world effect USA prices.  I don’t expect we will see this next year a return to the low USA prices of early 2016.’  EU markets in particular will remain high until an alternative supply is available for Europe later in 2017 from Argentine new crop.  Quality of the U.S. crop will be key to recapturing the EU market, but the present drought makes everyone suspicious about aflatoxin.

 

via Peanut Farm Market News, a peanut hotline service of The Spearman Agency, Tyron Spearman, editor