Just a few months ago, we were looking at excessive and growing carryover supplies in the peanut industry. The carryover is basically the surplus peanut inventory “carried over” into the next crop year. There is a traditional target carryover of about 500-600,000 tons, which allows about 3 months supply. This supply is needed to keep peanut shellers operating while the annual harvest occurs in September, October and November. The previous Peanut Stocks and Processing report issued in July by USDA predicted Ending stocks of about 1.29 million tons in Fall 2016 and 1.45 million tons in the Fall of 2017. This surplus supply was catastrophic to prices as supply was abundant and markets were trying to encourage farmers to reduce peanut production. The July report is shown in the following table. The attached tables are presented in millions of pounds. Please divide by 2,000 to get farmer stock tons.

July 2016 Peanut Supply & Disappearance courtesy of Peanut Farm Market News (88)

Fast forward to the October report and major adjustments were made in the 2015/16 marketing year in the way of reduced production and increased disappearance. George Lovatt, peanut broker, recently commented in the Southeast Farm Press, “Where those tons went, really cant be accounted for. They are gone.” The industry also believes it is possible that the estimates for 2016 production are too high, with a predicted production of 3,150,000 tons, based on an average yield of 3,976 pounds per acre. Regardless, current reports suggest a more comfortable carryover of 842,000 tons preceeding the 2016 harvest, and about 1.04 million tons in the Fall of 2017. Again, the level might be reduced pending actual 2016 production, which included drought conditions in parts of the Georgia peanut belt.  These supplies are adequate and will continue to limit prices received by farmers. However, increasing domestic food use and continued high level of exports are favorable for the markets and prices received by farmers.

October 2016 Peanut Supply & Disappearance courtesy of Peanut Farm Market News (135)

Thanks to Tyron Spearman and his team at Peanut Farm Market News for keeping us current on changing conditions in the peanut markets.