Wednesday, February 9, 2011

Nero Fiddles as Rome Burns

Like Nero fiddling while Rome burned, peanut buyers seem asleep at the switch this year and are about to run the train off the track.

Shellers blame it on the manufacturers and if that is true I wouldn't take the risk this year either so I cannot point a finger at the shellers too much on this issue.

I write this as I am sitting listening to reports on the research the Commission has funded this year on peanut production. What was most enlightening was what I heard before the meeting. The numerous farmers present say peanut acre are about to plummet. The economist who does comparative numbers of competition of peanuts, cotton, corn and so forth says acres will be at 2009 levels or lower which would mean a cut of 30 percent in acres, give or take.

The 2010 crop has serious quality problems with reports of shockingly dismal out-turns of usable kernels from peanuts which have had to go to the blancher for clean up. Blanching plants are running at capacity and reports are peanuts are even being trucked from the Southeast to Texas for blanching.

Cotton this week passed another barrier at $1.18 which nets to the farmer at about $1.15. Some cotton brokers say $1.35 cotton is a real prospect now. Note $1.15 cotton to the farmer needs a $685 peanut to be competitive.

What does all this mean. Many acres have been committed to cotton. Georgia cotton acres is already slated to be up over 200,000 acres from last year and that is coming from peanuts. Peanut acres will be down and the industry has done this to itself. Carry out of peanuts in to the 2012 crop year could well be far below the 1990 levels. For farmers if you are going to plant it don't get excited about these cheap $1436 for his peanuts.

For better buy your peanut butter now.

For the shellers and especially the manufacturers be ready to watch the train run off the cliff because you were asleep at the switch.

1 comment:

Don Koehler, Exec. Dir. said...

An odd comment was just made that perhaps it is better for the peanut shellers to creat a short supply for 2011 to make the 2010 peanuts worth more considering the quality issues we are facing?