Friday, July 6, 2012

Planted Acres Estimate

NASS released its planted acres report earlier and after some review this is one man's idea of what it means.

When everyone including the folks in Texas were thinking their industry would crawl under a rock and die, their farmers showed everyone and increased acres over last year. So much for the need to get new production areas. Still we have new production areas like those in Arkansas and Missouri.

If you don't have a contract then I am a bit doubtful there will be one before harvest which is much better than the loan rate so I wouldn't be in a hurry to sign a nothing contract if I was a farmer. The loan will pay you $355 plus or minus on grade.

This crop is a long way from done and there is a lot which can happen between now and harvest. Some areas are suffering from extreme heat and drought as I write this. As a rule the Georgia crop looks pretty good but it is far from perfect and far from done.

Drought can lessen yields, high nighttime temps can increase aflatoxin, a rainy harvest can reduce both yield and quality.

If you produce peanuts in excess of your contract there is no sense now asking why the market is not better. We had urged caution before planting but hindsight is 20/20 and some folks got a thousand a ton last year. If you do find yourself in that situation then you have an option...wait until after January 1 to put your peanuts in the loan and that gives you until October 31 to redeem peanuts from the loan. If the market is at $355 at the end of harvest then it may stand to reason there will not be any decent contracts offered next year and plantings will decline. If they decline enough then loan peanuts may increase in price especially after we plant and as the 2013 harvest approaches.

We cannot any longer look at a crop year when making marketing decisions.

And remember, the pipeline from 2011 is about empty so they do need some peanuts in excess. This makes patience a virtue as we market uncommitted peanuts. If there is any significant disruption in supply of 2012 peanuts then the market could well respond.