Peanut Supply/Demand and Outlook For 1999

According to USDA's March 31^st Prospective Plantings report, US peanut acreage in 1999 will remain unchanged from last year's level. USDA forecasts that farmers will plant 1.508 million acres of peanuts in 1999- down just 3,000 acres from last year. If realized, this will be good news. Prior to the report it had been widely thought that peanuts acreage might be up as much as 10% due to low prices for alternative crops such as cotton and corn.

This should add some support to peanut contracts and prices could inch up a bit but nothing spectacular is expected this early in the season. Peanut consumption still lags behind last year's pace and the industry must work through, in my estimation, 100-150,000 tons more peanuts than it needs due to use of the buyback option on additionals.

Peanut yields appear to again be trending up in recent years- perhaps due to increased use of higher yielding and disease-resistant varieties and better control of tomato spotted wilt virus. Expected yield is important in planting decisions. Overplanting can result in too many additionals and with use of buybacks can deflate prices for quota peanuts.

Peanut contracts are currently in the $610-625/ton area for quota and $300-325/ton area for additionals. Prices are likely to remain at these levels but could increase if current dry conditions persist into the prime planting times in April. The market is also watchful of conditions in Argentina were conditions during harvest have been cool and wet. (Don Shurley)

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