Quota Peanuts In Loan Very Likely This Year.  USDA's August report estimates the 1999 US peanut crop at 1.924 farmer stock tons– down 3% from last season.  The US average yield is forecast at 2,657 pounds per acre compared to 2,702 lbs last year.  Plantings are down 52,000 acres with almost all this reduction coming from Texas.

Going into the ‘99 crop harvest, the peanut market situation is dominated by burdensome stocks.  Thanks to heavy buybacks of additionals in the ‘98 crop, we enter the ‘99 crop year with roughly 200,0000 tons (farmer stock equivalent) more old crop inventory than on average the past 3 seasons.  For this reason alone, contract offers on quota peanuts have been near support level.

There is somewhat brighter news on the demand side.  Peanut consumption continues to improve.  For the ‘98/99 marketing year just completed, use was up about 3% from the previous year.  The market is being carried by candy and snacks, however.  Use of shelled peanuts for peanut butter was down 1.6% and government purchases of peanut butter and roasted peanuts for food/nutrition programs has all but disappeared since February ‘98.

With the build up of stocks and over-commitment of buyers last year with buybacks, it is unlikely that the industry will continue to build stocks.  Beginning with the ‘96 crop, quota has increased each year since and on top of that, buybacks have totaled 459,000 farmer stock tons.  Fortunately (surprisingly), very little quota has gone to CCC loan.  This has lead to the gradual build-up of stocks, however.  This year, it is estimated that perhaps as much as 100,000 to 150,000 tons of quota peanuts could be placed in CCC loan.  (Don Shurley)

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