Agricultural News
Kim Anderson Demystifies Peanut Marketing on this Week's SUNUP Program
Tue, 26 Nov 2013 16:50:06 CST
Marketing peanuts has always been somewhat of a mystery, especially for those not familiar with the crop. Oklahoma State University Extension Grain Marketing Specialist Kim Anderson takes a look at the process and its pitfalls in his preview to this week's SUNUP program.
Anderson tells host Lyndall Stout that practically all peanuts in the state of Oklahoma and Texas are placed under government loan. The loan rate sets the foundation for the crop's price.
"That loan rate, somewhere around $355 a ton, is the base price or the minimum price that producers will receive.
"Shellers offer producers an option contract that says the producer will put the peanuts under loan, the producer will receive, say, $355 a ton for the peanuts at that time. When the sheller needs the peanuts they pay the producer the difference between the market price and the loan rate and assume the loan. So the producer keeps the loan money. The shellers assume the loan and take care of that and they give them additional money between, essentially, the loan rate and the market price."
This is where it gets difficult, Anderson says, because the shellers don't have any one central place to determine what the market price is. They talk to brokers and processors to see what they are paying for peanuts and then they also look at the export market.
"The shellers take a lot of risk when they buy those peanuts because there is no central location for selling peanuts and they have to look at the market as a whole."
Anderson says the USDA reports some peanut prices, mainly those paid to producers, but there are no reports detailing sheller prices anywhere.
"That's one of the problems with marketing peanuts. There is no really good price quote that you can compare what you are receiving to."
Catch SUNUP: Saturdays at 7:30 a.m. & Sundays at 6 a.m. on OETA-TV or online at http://www.sunup.okstate.edu or http://www.youtube.com/sunuptv.
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