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Breakeven yields, prices for 2022 Southern row crops

Brad Haire peanut-planting-georgia-farm-3-a.jpg
Peanut market outlook and insight on breakeven yields and prices for other major Southern row crops, too, considering the increased cost of production in 2022.

At the annual Alabama-Florida Peanut Trade Show held in Dothan, Ala., Feb. 3, Marshall Lamb provided a peanut market outlook and insight on breakeven yields and prices for other major Southern row crops, too, considering the increased cost of production in 2022.

In short, prices for major Southern row crops are in good spots across the board, but the increases in cost of producing those crops have producers in a tough spot. Volatility will remain high on both prices and production costs as the 2022 season unfolds.

“Crop prices right now are no doubt attractive, and we need to be glad we have them. We need them. The economic scenario would be better if they were even higher, because when you look at the cost of producing peanuts, corn, soybean or cotton, we would be in a very difficult scenario if we were seeing the same prices we saw in previous years,” said Lamb, an economist and research leader at the USDA National Peanut Lab.

To illustrate benchmark breakeven yields and prices for peanuts, corn, cotton and soybeans, Lamb incorporated data from the 2022 economic crop enterprise budgets from Auburn University and the University of Georgia, along with his adjustments for the rise in costs for fuel, nitrogen, phosphorus and potassium.

To set the stage, Feb. 2 commodity prices were:

  • September corn at $5.93
  • December cotton was at $1.13
  • November soybeans at $13.93

Basis adjustments were not included in his analysis. Peanuts do not trade on the commodity board, but some early season contracts in some regions the first of February were $475 to $500 per ton for runners on partial production. High-oleic offers were $25 to $50 higher.

Variable and total costs

Combining data for total cost and variable cost for each crop from the two respective university budgets, Lamb determined:

  • For non-irrigated corn, the breakeven yield was 99 bushel per acre average with a breakeven price of $6.88 per bushel.
  • For irrigated corn, the breakeven yield was 198 bushel per acre average with a breakeven price of $5.88.
  • For non-irrigated cotton, the breakeven yield was 753 pounds per acre average with a breakeven price of $1.13 per pound.
  • For irrigated cotton, the breakeven yield was 990 pounds per acre average with breakeven price of 93 cents per pound.
  • For non-irrigated soybeans, the breakeven yield was 31 bushels per acre average with a breakeven price of $14.31 per bushel.
  • For irrigated soybeans, the breakeven yield was 45 bushels per acre average with a breakeven price of $10.46 per bushel.
  • For non-irrigated peanuts, the breakeven yield was 3,608 pounds per acre average with a breakeven price of $531 per ton.
  • For irrigated peanuts, the breakeven yield was 4,525 pounds per acre average with a breakeven price of $481 per ton.

U.S. peanut farmers grew and harvested one of their best crops in memory in 2021, producing 3.2 million tons of good quality peanuts on 1.54 million acres with a national average yield of 4,135 pounds per acre. Domestic per capita consumption reached a record 7.9 pounds, growing by more than a pound in the last decade, proving organized promotions and marketing by the industry continues to pay off.

During the peanut meeting, Bob Parker, president and CEO of the National Peanut Board, said that over the last decade U.S. peanut farmers have increased their total annual production by 1 million tons. More importantly, aggressive marketing efforts across the industry have worked to grow peanuts footprint in the market, clearing a path for the industry and farmers to continue to grow.

Peanut exports

In 2011, the U.S. exported roughly 233,000 tons. The high-water mark for exports was 672,000 tons in 2016. The 2019 crop suffered under late-season drought, resulting in overall lower quality production. For the 2019 crop, the U.S. exported 669,000 tons, mostly peanuts going to the oil market, which included more exports to China. As of February, the 2021 exports so far totaled roughly 464,000 tons, on par with 2019 export numbers for the same time frame.

“Our exports, though not on track to be as high as previous marketing year, are all in all pretty good, and it’s important that we find ways to keep them at the levels we’ve seen over the last two to three years,” Lamb said.

Lamb said the U.S., Argentina, China and India remain the world’s primary exporters of peanuts, but a new trend is taking place in Africa. Senegal and Sudan have increased their peanut exports considerably over the last decade. In 2013, Senegal and Sudan exported 166,000 tons. For the 2021 marketing year, the two countries will export 900,000 tons.

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