Peanut Market News – September 23, 2016

U.S. PEANUT EXPORTS SET NEW RECORDS

U.S. peanut exports (August – July) reached a record 700,000 tons (in-shell basis) in 2015/16, 43 percent above last year.  Shipments to China and Vietnam climbed to new heights, accounting for most of the export gains. Total shipments to other markets declined 4 percent for the year, primarily in response to strong competition from Argentina which impacted U.S. sales to the EU.

Sales to China totaled 197,000 tons, an eight-fold increase over the previous year. A majority of these were lower-valued raw peanuts shipped in shell and destined for crush. However, exports of higher quality peanuts for the food market were also significantly higher. Peanut exports to Vietnam reached 81,000 tons, a three-fold increase over 2014/15. Unlike China, a majority of the peanuts exported were shipped as raw shelled peanuts.

Despite the large increase in export volume, the total value of peanut exports rose by a more modest 26 percent to $656 million. Reduced sales of higher valued peanuts to the EU, coupled with the tremendous growth in lower-priced peanuts for crush led to an 11 percent decline in the average unit value.

The strong export performance seen this year is forecast to continue into the 2016/17 marketing year. China is expected to pursue additional imports of low valued peanuts in the coming year, both in the U.S. and other markets such as Senegal and India. Exports for higher valued food peanuts are expected to be brisk as demand remains strong.

Currently, prices for higher quality peanuts remain elevated as the market faces a somewhat tighter supply situation following a 20 percent reduction in this year’s peanut harvest in Argentina. However, global stocks remain adequate to meet demand and keep price premiums in check. Average export unit values in the coming year are expected to reflect those seen in 2015/16 as the export of crush quality peanuts continues to represent a significant portion of export sales.  However, stronger prices this year for food peanuts, and possibilities for increased sales in light of the reduced harvest in Argentina could lend some support. (Source:  FAS/USDA – September 2016 – Oilseeds – World Markets & Trade)

PEANUT INDUSTRY TO HOST FOREIGN CUSTOMERS

Exports to Japan are higher in 2016 and a reverse trade mission of Japanese customers are coming to Georgia September 25-28.  The group will be based in Tifton and will visit farms, buying points, and shelling plants nearby. Assistance is provided by the Georgia Peanut Commission.

APC will host a large group of Chinese peanut buyers from October 11-14. China has become the largest export market this year for the United States and there has been a great deal of interest in the Chinese peanut industry for this visit to the U.S. The tour will start out in Atlanta and will be based in Bainbridge, Georgia, visiting nearby shelling plants, farms, buying points and the National Peanut Lab. Mexican customers will be making a visit to San  Antonio, Texas, October 24-27. In addition to touring, farms, shelling plants, and manufacturing facilities, a seminar will be held with expert speakers, a Broker/ Sheller panel to discuss the peanut market, and Mexican Manufacturer panel. Texas Peanut Producers Board will assist.  Contact Stephanie Grunenfelder at sgrunenfelder@peanutsusa.com for more information.

EXPORTS OF U.S. PEANUTS

U.S. peanut exports keep setting new records and the trend continues in July.  For the year, peanut exports are up 64.1%, over 609,000 Metric Tons.  In-shells were triple in July and now up 148.6% for the year.  Raw shelled peanuts are up 23.1% and peanut butter exports up 11.7%.  China and Vietnam are the key leaders, but Canada keeps buying raw shelled and peanut butter.  Value of exports were over $804 million, up 23%.  Supplies are certain to be tight.

2016 U.S. PEANUT ACREAGE UPDATE

The Farm Service Agency of USDA has released 2016 peanut acres as reported by farmers as of September 1, 2016.  This should be the final adjustments.  

U.S. PEANUT ACREAGE BY STATE

 

 

STATE

 

(1)

2015 Reported

FSA Acre-NUTS

9-15-15

2016 Reported    FSA Acre-NUTS

8-01-16

2016 Reported    FSA Acre-NUTS

9-01-16

NASS 2016 Peanut acres 9-12

 Alabama

193,946

170,451

172,632

173,000

Arkansas

16,311

23,035

23,035

 23,000

Florida

181,258

148,105

151,567

146,000

Georgia

774,138

713,253

712,669

710,000

Louisiana

1,058

525

525

Mississippi

41,450

37,093

37,271

39,000

Missouri

1,423

3,978

4,003

Nebraska

68

69

N. Mexico

4,902

7,782

7,979

7,000

N. Carolina

88,989

98,368

100,310

101,000

Oklahoma

7,250

10,866

11,214

12,000

S. Carolina

109,917

107,844

108,075

106,000

Tennessee

177

177

Texas

162,793

268,220

300,706

250,000

Virginia

18,096

20,166

20,131

20,000

Other

24,000

TOTAL

1,601,718

1,609,954

1,650,365

1,587,000

           

2016 U.S. peanut acreage is now up 3% based on FSA records as reported by farmers to a total of 1,650,365 acres.  The National Ag Statistics Service was estimating at 1,587,000 acres, down 0.9%.  If farmers can average 4,044 lbs. per acre as estimated by NASS, U.S. production could be 3,337,038 tons.   

Some surprises in the acreage estimate were:

The Texas surprise last month of 268,220 acres reported by farmers is now 300,706 acres..  Officials believe a major portion of these acres are planted only for PLC payments using generic cotton acres and will not be harvested.  Texas will usually harvest about 160,000 acres.

WHAT REALLY HAPPENED TO THE USA PEANUT MARKET? – (Broker’s Perspective)

Although USA produced over a 3M+ ton crop this year, we are currently completely out of unsold inventory. Back in late Fall 2015/early Winter 2016, when prices were 15% lower than current levels, shellers owned contracted but unsold inventory of farmer stock.  With edible buyer’s comfortable, decisions were made to market farmer stock to China.  Tremendous demand was satisfied and my estimate is over 300,000MTs were sold.  

Currently, the USA market has firmed and lack of inventory and also Argentine harvest issues have presented demand that we cannot fill.  USA shellers are comfortably sold for new crop October forward and both farmers and shellers are taking a wait and see attitude with spotty rains occurring in the SE USA.  We will again produce a USA crop over 3M tons farmer stock, but with high heat of July and limited rainfall, our crop (particularly dry land/non irrigated) is showing signs of stress.  Irrigated acres are in good shape but the next 3 to 4 weeks are critical and we need proper rainfall.  

Meanwhile, crop prices have moved from the low 40’s fob USA to the low 50’s on a per pound basis.  An interesting development has occurred due to Argentina harvest issues.  The price of EU quality material has increased and the differential between USDA afla negative material and USA EU afla material has quickly widened.  Today the differential for EU over USDA negative material is close to US$ 8cts/LB.  EU material for new crop from the USA is today either unavailable or very high priced.  After harvest when shellers know better what is available, I expect more offers, but with Argentina availability limited, I don’t expect a possible downside on EU material until Argentina new crop next May/June of 2017.  

MAJOR UPDATE ON ENDING STOCKS

Surprise, in the Stocks & Processing report that came out this month, the July 31 ending stocks were reduced by 755,000 farmer stock tons.  USDA now shows we have 525,549 tons of FS on hand, which could still be a little high the way the market is acting, but it’s 1,031,000 less FS tons that USDA showed on hand at the end of June (1,556,734 tons).  Officials reported that some numbers were being reported wrong. 

In the Supply & Disappearance report, which will be updated later this month, this means that instead of carrying over 1,650,000 FST equivalents from 2015 crop, we should be carrying over only 895,000 tons.  The industry was upset that the 1,704,000 tons on hand was not right. Hopefully, the895,000 tons on hand should be more accurate.  This is a game changer for peanuts if Stocks and Processing holds true. 

2015 PLC PAYMENT RATE FOR PEANUTS FOR PLC

The following provides the PLC payment rates for peanuts.  Item Peanuts Dollars Per Pound Reference Price 0.2675, National Loan Rate 0.1775, Marketing Year Average (MYA) Price Higher of Loan Rate or MYA Price 0.1930 ($386 per ton).PLC Payment Rate 0.0745.  Sequestration – (.932) of total $138.87 per ton.

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