The stresses of the agriculture business have never been greater.   From two Southeast Hurricanes (Irma and Michael), 2019 quality problems in peanuts, low commodity prices, COVID-19 pandemic, even riots and unrest in major cities, and talk of a food shortage...it just never seems to end.

                COVID-19 - The U.S. peanut market has remained relatively quiet during the COVID-19 pandemic.  There has been no panic in prices.  The increase in prices for raw shelled peanuts was caused mostly by quality issues from the 2019 crop.  Aflatoxin reared its ugly head and suddenly, clean top quality raw shelled peanuts were a premium. 

                Shellers and production facilities set up COVID 19 regulations and kept delivering while protecting their employees.  With consumers concerned about a food shortage, the peanut industry  provided  grocery stores and other food outlets with the peanut products consumers need and want.  Although some orders were pro-rated,  American peanut industry takes these responsibilities of producing quality food products very seriously. The nation’s leading health and food and agriculture agencies were also working with industry to ensure a safe and stable food supply.

                USDA HELP - Congress and USDA, through the Farm Service Agency (FSA), started accepting applications from agricultural producers who have suffered losses. The CARES PROGRAM ( Coronavirus Aid, Relief, and Economic Security Act) allocated $ 16 billion program that would provide vital financial assistance to producers of agricultural commodities who have suffered a five-percent-or-greater price decline due to COVID-19.  Problem was that peanuts did not have a 5% or greater loss.

                Other programs came to the rescue including the Paycheck Protection Program and the WHIP Program (Wildlife, Habitat Incentive Program) mainly helping farmers because of storms or drought.

               ACREAGE ESTIMATE & PRODUCTION - U.S. peanut production is forecast to rise to 5.9 billion pounds (2,935,000 tons) from 5.5 billion in the 2019/20 marketing year. Planted acreage intentions are up 7 percent to 1.5 million acres with the largest increase in Georgia.  Some estimate that acreage could be up 15-20%.  Seed germination on later shelled lots was reported as a problem.

                     The U.S. average yield per acre is projected to increase by 1 percent to 4,000 pounds per acre. Based on a lower peanut supply and slightly higher use, the carry forward is now estimated at 11% less or 828,000 farmer stock tons. 

                    CONTRACT OFFERS - Farmers wanted more than the $400-$425 per ton for runners and $450 per ton on Virginias with shelled market prices at $.45 per pound.  Competition from cotton or corn was not exciting on prices. Most farmer stock contracts were signed when raw shelled prices jumped to $.80 per pound. Farmers are hoping for a price improvement higher on un-contracted 2019 loan peanuts and 2020 un-contracted stocks.  Offers will likely be impacted on reported acreage issued by USDA on June 30.

                  PLC PAYMENT - Per USDA, The Average price received by farmers for farmer stock peanuts averaged $.206 per pound ($412 per ton) in March 2020.  February price was slightly lower at $.205 per pound or $410 per ton.  Prices have been the lowest in history this year with a low o $384 per ton November to a high of $418 per ton in January.  The 9-month average is about $404 per ton.  For farmers who signed up for the Price Loss Coverage program in the Peanut Program, farmers will receive a payment in October the difference between the average price (now at $404) and the Reference Price of $535 per ton or $131 per ton.  The preliminary estimate from USDA is $125 per ton.  This price would be applied to 85% of the peanut base tons on the farm.        

                   U.S. PEANUT USAGE - Use of raw shelled peanuts in primary products in April, 2020 was led by peanut butter, up 12% for April vs April 19 and up 5.5% for the year.  The impact of the Coronavirus pandemic urging families to stay at home has many grocery stores asking for more peanut butter.  The pandemic is also encouraging more snacks, up 9.2% for the month and now up 5.4% for the year.  Should be another boost when the government purchases.  Government purchases for Nutrition Programs in April totaled 1.173 million lbs of peanut butter, DOWN 330% compared to same month last year. However, for the 9 months, government purchases are up 2.6% to 18.6 million lbs.   Overall, usage is up 4%.

                EXPORT PEANUT USAGE - U.S. peanut exports are up 25.3% over the 8 month period and up 33% comparing Mar. 20 and Mar. 19.  In-shell peanuts are moving to China, 5,939 MT in March and now up to 61,000 MT for the year. China is also buying raw shelled peanuts, ranking third in raw shelled shipments behind Canada and Mexico.  Raw shelled exports are up 4.0%, but peanut butter is down 9.4%. U.S. continues shipping peanuts into China in spite of the Coronavirus.  

                    Argentina is almost complete with peanut harvest.  Potential is said to be 1,260,000 MT.  Officials report that quality is good and yield should be 3,300/3,500 kgs per hectare.  Acreage is said to be about 10-12% less than last season as SMK’s are reported a little less, likely due to the smut. 

                  In Brazil, the peanut production, distributed between the first and second crop, is estimated at 557.3 thousand tons, 28.2% more than in the last crop.  With ETHANOL IN CRISIS, the sugar cane gives ground to the peanut cultivar.  The sugarcane cultivar suffered a strong hit with the CORONAVIRUS PANDEMIC.  Peanuts are likely to maintain the growth in the area along with investments.

                MARKET TODAY -The market today is at a standstill as demand is very quiet for the time being.  It appears that USA manufacturers are watching demand trends and are worried to put on more bookings for late Summer, if peanut demand slides downward. 

                 Peanut butter guys are well aware of consumption increases but don't know if it will last and are taking a wait and see attitude.  Raw goods still priced in the low to mid 80's with few sales lower and demand absent.   Europe in a similar situation and both Brazil and Argentina are offering into the EU but buyer's quiet for the same reasons.    Officials are concerned about logistic issues in Brazil as the COVID virus is rampant and it is not know of the implications in shelling plants and logistics of moving goods to the port.

                WHAT NOW?  Over 70 percent of producers said they are either very worried or fairly worried about coronavirus’ impact on their farm’s profitability and over 60 percent said they expect farmers’ equity positions to decline over the next year.  As the economy returns to the new norm, sales of peanut butter and peanuts products should be at an all time high.  Good news for everyone is that the old 2019 crop and the large million plus carry-forward are about gone. 

                                LEADING MARKETING INDICATORS (As of July 15, 2020)

2020 Est. Peanut Acreage (+7%)                1,468,000,acres

2020 Est. Peanut Production (4,000 ac)   2,936,000 tons

2019 Est. Peanut Acreage (+ 1%)               1,391,000 acres

2019 Est. Peanut Production (3,949 ac)     2,748,043 tons

2019 Market Loan 7-15-2020                         2,341,062 tons

2019 Remaining in Loan                                      566,393 tons

2019-20 Domestic Usage (10 Mo.)                    UP + 3.7 %

2019-20 Exports (Aug - May) 10 Mo                 UP + 40.2%

Posted Price (6-3-20) Runners -$424.13 ton, Spanish - $416.70 ton. Valencia and Virginias - $430.94