US Farmers Plan to Plant Slightly Lower Peanut Area, Caught between Lackluster Prices and Positive Production Prospects

US farmers could plant 1.57 million acres under peanuts in the 2022/23 season, according to the USDA Prospective Plantings estimate. This is 0.9% lower than the 1.59 million acres planted in 2021/22. Peanut prices are 20% higher than a year ago, and under normal circumstances, a 20% yearly increase would be significant. However, the prices of other competing field crops have increased comparatively more and are behind the reduction in peanut areas. On the other hand, peanuts remain a reliable option in dry conditions and comparatively lower input costs for peanuts are also keeping farmers from making a dramatic switch to other crops.

Competition from Other Field Crops Planting Areas

Peanuts compete in several markets and prices are influenced by cotton, oilseeds, and tree nuts, among others. Although peanuts are regarded as oilseeds, only about 13% of the crop gets crushed for oil, 22% gets exported and 53% goes directly into the food industry (peanut butter, snacks, etc).

In terms of production areas, peanuts mostly compete with cotton, as both crops perform well in similar conditions. However, there are some traditional peanut areas that are suitable for other field crops and vice-versa. Cotton prices are 70% higher than a year ago, and the area under cotton is forecast to increase by 9%. Other oilseed prices have also soared in comparison to peanut prices. Soybean prices are at levels not seen since 2012, and canola, sunflower, and flaxseed are up 81%, 50%, and 135% respectively (Read more about prospective plantings for soybeans and minor oilseeds here). Tree nut prices have increased comparatively less year on year, for example, almond prices are only 14% higher than a year ago, and this is keeping downward pressure on peanut prices.

Farmers Could Wager on Peanuts once more, based on 2021/22’s Performance

Despite the weak price outlook for peanuts, the area to be planted under peanuts did not decrease considerably, due to several other factors. US peanut production for the 2021/22 marketing year is an estimated record 6.4 billion lbs. While this record crop is putting downward pressure on prices, and at first glance appears to lead to a reduction in the production area, it has an element that is promoting the area to be planted under peanuts. The record crop is an indication that modern peanut varieties are very drought resistant and can perform well even under harsh conditions. Peanut areas did have good precipitation early in the 2021/22 growing season, but most of the rest of the season, conditions were bone dry. Yet, peanut production was still very respectable and yields were the second-highest on record, at 4,135 lbs/acre. Going into the 2022/23 season, conditions are still dry over most production areas, and farmers might wager on the ability of peanuts to perform well in these conditions once again.

Another factor that is supporting peanut production is the comparative savings that can be made on fertilizer. Nitrogen fertilizers cost as much as 50% more than a year ago. Peanuts are part of the legume family and are natural nitrogen fixers, meaning farmers can save on fertilizer costs.

Based on the prospective plantings and the 5-year average yields of peanuts, production could again top 6 billion lbs in 2022/23. Domestic demand coming from the food industry has increased steadily by an average of 2% per year over the last 5 years, a trend that could continue into 2022/23. Total domestic consumption (crush and food) is estimated at 4,355 million lbs and exports could bounce back to 1,350 million lbs for 2022/23.