Peanut warehouse capacity, particularly in the Southeast, could reach its limit as the 2016 crop comes in, and farmers need to make sure that their peanuts will have room in a Commodity Credit Corporation-approved warehouse.
Peanuts not stored in approved warehouses cannot enter the federal peanut loan program.
“You’ve got to do what makes the most sense for your operation and what makes the most sense to your banker. But for God’s sake don’t plant (peanuts) without knowing where they are going to be stored,” said George Lovatt, a peanut broker and president of Lovatt and Rushing, Inc., speaking to peanut farmers at the Georgia Farm Bureau annual convention Dec. 7.
The uncomfortable carryover
The U.S. 2015 peanut production is expected to be 3.16 million tons and that will be adding to an already 1 million ton carryover from the 2014 crop. Expected total use, or consumption, for the next year will be around 2.7 million tons, which is up and going in the right direction, but leaves a potential 1.38 million ton unused supply from the 2015 crop that will carryover July 31, 2016, which marks the beginning of the 2016 peanut crop marketing year, said Nathan Smith, peanut economist with the University of Georgia Extension.
A decade ago, the industry liked to have 500,000 tons in carryover reserve to keep the shellers shelling and the pipeline moving through late summer until the next season’s harvest rolled through the system in fall. That “comfortable” carryover supply began to inch closer to 650,000 tons four to five years ago, Smith said. With the 2015 harvest finished, it is clear now the 2015 carryover supply is more than double what it comfortably needs to be, Smith said.
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