Farmers Satisfied with Planting Cotton

At current market offerings and already strong commitments based on cotton contracts many farmers who would normally grow peanuts seem to be satisfied with parking the peanut planter in lieu of cotton.

It seems cotton fared better under the 2010 drought conditions and the continuation of the La Nina weather impact which has the Georgia State Climatologist predicting warmer and drier than normal conditions through the Winter and Spring at the least and farmers seem happy to stay the course with cotton.

It is hard to argue that kind of logic. We would all rather stay with what does the best for us.

So what does this mean for peanuts? A $550 contract didn't get much interest and time is running out for the peanut market to find new life. Farmers will have a hard time getting financing without a contract. Manufacturers seem to be satisfied that the supply will always be there. Farmers are no longer willing to sell below the true cost. Shellers are caught in the middle.

If no one blinks soon we could see some very interesting price spikes in the market. I remember one farmer selling for $1436 in 1990. With quality issues it is certain we don't have enough peanuts in the pipeline to carry us until harvest 2011 so things may get very interesting.

Complicate this with the fact that cotton has to be delivered under a final contract and once that acre is contracted there is not enough money to get it out of cotton and back in peanuts. Same goes for corn and soybeans. They all have trading markets and sufficient volume to attract speculators. Peanuts does not.

If we get past the first of the year with no sufficient offer to entice producers to contract peanuts and there is any spike in the cotton market at all and Katie bar the door where we will end up as far as price for peanuts in the 2011 crop. Frankly, uncommitted 2010 crop will have to go up to fill the gap created by short plantings for the 2011 crop.

Don't look for a last minute reprieve on acres after corn is planted in February and March.

Buckle your seat belts. This might be one heck of a ride.