USDA Crop progress report for peanuts in the US showed an improvement of 3 points from last week between Excellent and Good.\u00a0 Excellent and good conditions improved from 72% to 75% (Graph 1).\u00a0 This condition is also 6 points better that last year at this time of the season.\u00a0 On the other hand, Texas crop report is 6 points below the US average (69%), mostly due to the dry and hot weather during this summer.\u00a0 Crop condition in Texas at this time of the year is below 2019 and 2017 reports.<\/p>\n
Graph 1.<\/strong><\/p>\n Graph 1<\/a><\/p>\n Acreage:<\/strong><\/p>\n 2020 estimated planted acreage has increased by 11.3% during this season (Table 1).\u00a0 This growth was principally located in the state of Georgia that planted 121.66 thousand acres more, followed by Texas and South Carolina, with an approximately increment of 17.5 thousand acres each.\u00a0 Cotton and corn prices during the beginning of the season were not attractive enough to compete for peanut acreage in these areas, being peanut production a more attractive crop investment.<\/p>\n <\/p>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Table 1.<\/strong><\/p>\n Table 1<\/a><\/p>\n The combination of a bigger area, and a higher yield estimation by the USDA for the 2020\/21 US crop resulted in an expected growth in total production of 13.8% percent in the US.\u00a0 Total world production is only expected to increase by 1.85% during this current production year (Graph 2).<\/p>\n United States rank number 3 on world volume exports, below India and Argentina and above China (Table 2) while producing approximately 6% of total world production.\u00a0 Roughly 19% of total world exports in volume could be attributed to the US during these last 5 years.<\/p>\n Total Exports from the US during the first semester of 2020 showed an increment of 51.9% compared to last year\u2019s first semester (January through June).\u00a0 This increment was mostly led by In Shell peanuts exports which increased by 77% during this similar period (Table 3). \u00a0China was the destination of this new exports that were not registered in previous years.\u00a0 China\u2019s purchases of total peanuts soared by 1,257.45% more compared to last year\u2019s first semester. \u00a0China has been purchasing mostly In Shell peanuts for oil production.<\/p>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Graph 2.<\/strong><\/p>\n Graph 2<\/a><\/p>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Table 2.<\/strong><\/p>\n Table 2<\/a><\/p>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Table 3.<\/strong><\/p>\n Table 3<\/a><\/strong><\/p>\n \u00a0<\/strong><\/p>\n Ending Stocks and Prices:<\/strong><\/p>\n US ending stocks have slightly decreased during these last 3 years given the increased in exports and higher consumption, but still above 1 million tons by the end of July.<\/p>\n 2019-20 average price (417$\/ton) has been significantly lower than the 10 years average price (466 $\/ton), and just above the 5 years average price (409 $\/ton). \u00a0Average price was similar to last year\u2019s price received by producers.\u00a0 On the other hand, these prices were better than 2015-16 and 2016-17 season prices which average the lowest prices in the last ten years (Graph 3).<\/p>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Graph 3.<\/strong><\/p>\n Graph 3<\/a><\/p>\n Prices were not affected by COVID 19 pandemic like other commodities. \u00a0An increase in exports during the first semester and a higher US consumption of peanuts during the pandemic helped to maintain stable prices.\u00a0 Peanut butter consumption increment during the pandemic supported prices above average during March and April.\u00a0\u00a0 Peanut usage increase by 3.2% during 2019-20 crops season, while peanut butter increased by 5.1% from last year (Graph 4).<\/p>\n \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Graph 4.<\/strong><\/p>\n Graph 4<\/a><\/p>\n 2019 Peanut crop was not included for CFAP Payments due to COVID 19 market disruptions.\u00a0 To be included in the CFAP program, the estimated price of a commodity should have decreased more than 5% between the week of January 13-17, 2020, to the week of April 6-9, 2020. \u00a0\u00a0Any commodity that did not experience a price drop of more than five percent was not eligible for support under CFAP like in this case with peanuts.<\/p>\n USDA Weekly National Posted Prices for peanuts report for August 25th<\/sup> average 420 $\/ton, combining the four different varieties, Runner (424.55 $\/ton), Spanish (415.57 $\/ton), Valencia (428.74 $\/ton), and Virginia (428.74 $\/ton).<\/p>\n Although these prices might cover variable costs, given District 1 budget calculation for irrigated peanuts, these are not high enough to cover total costs (Table 4). For an expected yield of 2.25 ton\/acre, calculated total costs breakeven price was 431.96 $\/ton for this coming harvest.\u00a0 \u00a0This breakeven price does not include farmer\u2019s return on investment expectations either.<\/p>\n Total costs calculated in the district budget included variable cost as well as fixed costs such as depreciation, equipment investment, and cash rent, which are highly variable between producers.\u00a0 While these prices are not high enough to meet economic expectations with a 2.25 ton\/acre yield, they might be enough to cash flow this year.\u00a0 Prices received and contracted by producers so far are above variable costs and cash rent. However, these prices are not high enough for an economical sustainable production system in the long term.\u00a0 Prices should be higher than our total costs plus farmer\u2019s expected profit margin breakeven price to keep farmers investing in new technologies and better production systems in the future.<\/p>\n Table 4.<\/strong><\/p>\n Table 4<\/a><\/p>\n Price Loss Coverage<\/strong><\/p>\n Most farmers chose for the PLC program for 2020-21 crop. \u00a0PLC payments are expected given today\u2019s USDA 2020-21 projected price of 405 $\/ton which is below 2020 Effective reference price of 535 to calculate the Price Loss Coverage payment.\u00a0 This preliminary estimate of 130 $\/ton difference should be applied to the 85% of the peanut\u2019s base tons per acre on your farm to estimate the PLC payment per acre. \u00a0Counter-cyclical payment yields per county in Texas vary from a minimum of 707 Lb.\/acre (0.35 Ton\/acre) to a maximum of 4,272 Lb.\/acre (2.14 ton\/acre).\u00a0 Assuming USDA projected price of 405 $\/ton and similar base yields, estimated PLC payments per county will vary from 39 $\/acre to 236 $\/acre (Annex 1).\u00a0 This final estimated payment will depend on the actual PLC base yield from your farm, and the final reference price for the 2020-21 season.<\/p>\n Francisco J. Abello<\/strong><\/p>\n Assistant Prof. & Ext. Specialist<\/p>\n Texas A&M AgriLife Extension Service<\/p>\n 11708 Hwy 70 South. Vernon, Texas, 76384<\/p>\n fjabello@tamu.edu<\/a><\/p>\n Tel: (940) 647-3908<\/p>\n @AbelloPancho<\/p>\n <\/p>\n The opinions and recommendations expressed are solely those of the author and are intended for educational purposes only as part of the Texas A&M AgriLife Extension Service.\u00a0 The author and Texas A&M AgriLife Extension Service assume no liability for the use of this newsletter.\u00a0 The Texas A&M AgriLife Extension Service provides equal access in its programs, activities, education and employment, without regard to race, color, sex, religion, national origin, disability, age, genetic information, veteran status, sexual orientation or gender identity.\u00a0 The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas Cooperating<\/em><\/p>\n Annex 1.<\/strong><\/p>\n Annex 1<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"