Thursday, October 7, 2010

Looking to 2011

This year has been an interesting year with great expectations and dashed hopes.

Damage from Burrower bugs has caused problems we have not ever seen in any significance. High nighttime temperatures caused an increase in Aspergillus. Drought reduced yields and grades have been quite low. It is safe to say at this point Mother nature has taken care of any discussion of a surplus of peanuts.

Complicate this with equally reduced cotton yields and even with increased prices for cotton many farmers find themselves in a difficult situation and wonder what 2011 will hold for them.

For 2011 peanut prices will have to increase if farmers plant them. Cotton this week was over a dollar a pound and contracts at two cents off of basis for next year are up to right at 83 cents. Some experts say cotton prices will go higher next year.

From the work done by the University's National Center for Peanut Competitiveness we know that in Georgia it will take at least $515 to $538 per ton to compete for acres with 83 cent cotton. What is more, uncommitted peanuts in the hands of farmers this year should still likely face some upside potential with some offerings already at $485.

Looking forward, the state climatologist says the current weather pattern will continue an that the drought will extend in to 2011 with hotter and drier conditions than normal. How long the pattern continues is yet to be known but it could well mean we go in to the season with inadequate soil moisture in some areas.

On the consumption front there are some bright spots. First, peanut butter sales are at a record high pushing consumption to record levels. Also, exciting news from Planters. Coming out in a couple months is the "Five Alarm" dry roasted peanuts. I am well convinced we could see a mini boom in the snack nut market with this introduction. The introduction of honey roast, now two decades ago, caused a real growth in the peanut market. This product has potential to have a similar, if perhaps smaller impact.

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