Monday, November 8, 2010

Will There Be Enough Peanuts?

Cotton prices for next year are approaching dollar cotton even after basis.

The National Center for Peanut Competitiveness has been comparing cotton and peanuts on the Representative Farms.

Discussions with many farmers seem to indicate that many farmers are not willing to plant peanuts at the current offering of $550.

Reports out of the VC indicate farmers are disheartened by this year's peanut crop and it may take $650 to get peanuts grown in that area in lieu of cotton.

Farmers are looking at booking cotton and once they have done that they will have to plant those acres in cotton. Remember cotton contracts are firm delivery contracts because there is a market where shortfalls can be made up.

Growers in Georgia to whom I have spoken seem intent on the fact that compared to cotton and other commodities, soybeans seem to be mentioned regularly, it will now take a contract with a 6 in front for peanuts to sufficiently compete for acres.

The quality and quantity of the 2010 crop has taken care of the pre-plant discussions of a peanut surplus.

For many producers planting decisions may be made by Thanksgiving and certainly by the first of December. If the manufacturers and shellers continue to hold at current offers we could face a shortage of peanuts in 2011-2012. This would make contracting peanuts a bad decision at current levels if we short the peanut crop.

Just one final note...State Climatologist has said hotter than normal and drier normal conditions will continue through a significant portion of 2011.

It may be an interesting year.

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