China helping to curb peanut surplus

“We had a tremendous crop in 2012 and we were looking at a carryover of approximately 1.2 million tons,” said Randall Griggs, executive director of the Alabama Peanut Producers Association (APPA).  “That’s about three times what we consider normal.”

Griggs said on average Alabama sees a carryover of about 500,000-600,000 tons.

The surplus was the result of increased farming acreage, following a 2011 peanut crop that was hurt by record draughts in Texas.

The result was high contract prices in 2012 due the shortage of peanuts, which ultimately led to farmers producing more peanuts during the 2012-growing season. 

Increased acreage and favorable weather conditions led to record high yields for many peanut-producing states.

“What’s exciting is, in a year when we need to sell more peanuts than we ever have before, the Chinese have come into the U.S. market and are buying quantities of peanuts that I would’ve never imagined in my lifetime,” says Bob Parker, president and chief executive officer of the National Peanut Board.

According to Parker, the Chinese peanut supply was disrupted due to crop problems in India, reducing their ability to export to China.

“Hopefully there will be more purchases and China can become a market for peanuts in the future,” Griggs said. “We almost doubled our exports in that one purchase.”

Griggs said the Chinese purchase of peanuts took Alabama out of what he referred to as a stagnate market.

“A lot of farmers were considering acreage cutbacks on peanut crops, but this combined with higher prices for corn and cotton might increase the need for more peanut production,” Griggs said. “This should make it a littler easier on farmers in 2013.”

Despite the commerce from China, some experts say peanut production in the South could still stand some reduction.

Marshall Lamb, research leader for the USDA/ARS National Peanut Laboratory in Dawson, Ga., said China did help alleviate the surplus, but a reduction in acres is likely still needed in 2013 to get supply back in balance with demand.

For consumers, the increased surplus could mean lower prices on certain peanut products such as peanut butter.