A smaller U.S. peanut crop in 2011, strong demand and the poor quality of the 2010 crop have resulted in tight supplies of good quality nuts and sharply higher prices for peanuts and for peanut products, including peanut butter and peanut oil.

Major peanut butter manu-facturers, including ConAgra Foods (Peter Pan), J.M. Smucker Co. (Jif), and Kraft Foods Inc. (Planters), all announced price increases ranging from 22% to 40% in the past couple of weeks, effective in late October or

early November. Unilever, which makes Skippy, hasn’t made an announcement but said it would adjust prices as needed. Private label peanut butter ingredient costs were up 30% to 50% from last year, but retail price changes were not readily available.

USA Today referred to the situation as the “Great Peanut Shortage of 2011.”

The U.S. Department of Agriculture on Oct. 12 estimated 2011 U.S. peanut production at 3,628 million lbs, up 5% from its September forecast but down 13% from 4,157 million lbs last year. The crop was 48% har-vested in the eight major states as of Oct. 16, the U.S.D.A. said.

“After a very dry summer, peanut harvests for parts of the Southeast likely benefited from abundant late-season rains,” the U.S.D.A. said in its Oct. 13 Oil Crops Outlook. “Although the crop is up from the September forecast, it would still be down 13% from last year and the smallest harvest in five years.”

Estimated 2011 peanut yield was 3,256 lbs an acre in October, up 5% from September but down 2% from 2010. Harvested area was estimated at 1,114,000 acres, unchanged from September but down 11% from last year.

It hasn’t helped that the nation’s traditionally second largest peanut growing state, Texas, has been in the grips of exceptional drought all season, or that the largest producing state, Georgia, has dealt with extreme drought in many areas. Peanut production in Texas was estimated at 315 million lbs as of Oct. 1, down 46% from 2010 and dropping the state’s rank to fourth. The average yield in Texas was estimated at 3,000 lbs an acre, down 17% from 2010, and harvested area was estimated at 105,000 acres, down 36%. The condition of the crop in Texas was rated 47% poor to very poor, 34% fair and 19% good to excellent as of Oct. 16, compared with 1% poor to very poor, 22% fair and 77% good to excellent at the same time last year, according to U.S.D.A. Crop Progress data.

Last year the peanut crop in the eight major states overall was not rated significantly better than this year’s crop, with 2010 good to excellent ratings at 44% (40% on Oct. 16, 2011) and poor to very poor at 22% (23% this year). Dry conditions persisted, just in other areas.

“As a result of the severely dry conditions during the growing season, many peanuts in the region have become contaminated with aflatoxin, which has reduced the quality of many harvested peanuts,” the U.S.D.A. said in its Oct. 8, 2010, Crop Production report. The combination of quality issues that limited usable supply and strong demand last year and lower production this year is resulting in much tighter supply for the 2011-12 marketing year, which began Aug. 1, 2011.

U.S. peanut carryover on Aug. 1, 2011, was estimated by the U.S.D.A. at 1,516 million lbs, down 17% from 1,829 million lbs a year earlier. Carryover on Aug. 1, 2012, was projected at 1,042 million lbs, down 31% from this year.

“While the long, steady rise in the use of peanuts for food may continue this year, its growth could slow,” the U.S.D.A. said in its October Outlook. “Domestic food demand is forecast to increase less than 1% in 2011-12 to 2,860 million lbs (up 6% in 2010-11 from 2009-10).

“In contrast, exports and other domestic uses of peanuts are seen weakening,” the U.S.D.A. said. “Those declines in use may not offset the reduction in supplies.”

The U.S.D.A. projected 2011-12 total peanut supply at 5,224 million lbs, down 14% from 2010-11 (which was up 3% from 2009-10), and total use at 4,182 million lbs, down 8% from 2010-11 (which was up 12% from 2009-10).

The tighter supplies have significantly boosted peanut prices. The U.S.D.A. projected average 2011-12 peanut prices paid to farmers to range from 28¾@31¼c a lb, up from 22½c in 2010-11. The preliminary average price paid in September was 23.2c a lb, up 17% from 19.9c in September 2010.

“In Georgia, prices this fall for un-contracted peanuts have soared above $900 per ton (45c a lb),” the U.S.D.A. said. “Although pre-planting contract prices were up sharply last spring, few topped $500 per ton at the time (25c a lb).”

In its Weekly National Posted Prices for Peanuts, the U.S.D.A. said the price of the most common Runner peanuts was $1,199.52 a ton, or 60c a lb, effective Oct. 19-25, equal to 2½ times the posted price a year ago of $474.54 a ton, or 24c a lb. The Runner variety accounts for 80% of U.S. peanut production.

Makers of peanut snacks and candies indicated they were watching the market and competitors’ moves before making price adjustments. Of the 2,021 million lbs of peanuts used in products in 2010-11, 60% went to peanut butter (up 2% from 2009-10), 20% for peanut candy (up 25%) and 20% for snack peanuts (up 12%), according to the U.S.D.A.

Shelled peanuts crushed in 2010-11 totaled 441 million lbs, up 35% from the previous year, the U.S.D.A. said. Crude peanut oil production was 190 million lbs, up 26% from 2009-10. Preliminary peanut oil prices in the Southeast averaged 97.5c a lb in September, up 42% from a year earlier, the U.S.D.A. said. Prices were projected by the U.S.D.A. to average 83@87c a lb in 2011-12, up from 77.2c in 2010-11 and from 59.6 in 2009-10 but below the record 94.5c in 2007-08.

The price increases are coming at the start of the key fall winter holiday baking season.