Peanuts: Drought In Argentina Steering World Market Toward U.S., Brazil

    Nothing in the weather has brought relief to the current historic drought that has settled over a large part of Argentina – including the entire central peanut area.

    Peanut crop conditions continue to deteriorate due to extreme drought stress, which has been compounded by the effects of winds.

    The climatologist Eduardo Sierra commented that there will not be a rainy season that improves the drought situation.

    “The interior of Argentina will continue being punished,” he said.

    The lack of moisture that began at the end of November developed abruptly.  After five so-called wet years, what happened this season has been one of the most rapid examples of a climate shift in our country’s history.

    Typically, years with high drought effects have a dry April, whereas the drought we are in now started much earlier. It is an unpredictable phenomenon.

    Meteorologist Eduardo Sierra said that the central area of Argentina – basically, the central-west region of Buenos Aires, north of La Pampa and Córdoba – would likely not see a recovery of wetter conditions in the coming months.

    “The interior of Argentina will continue being punished,” he said. “It is difficult for the situation to improve.”

    The World Peanut Market Reacts

    With this drought, we have seen a global shift from a buyer’s market to a seller’s market, mainly when it comes to peanuts that meet European Union specifications. Argentine shellers (exporters) withdrew from the world edible peanut market, waiting until concrete, official data. They want to  see how many hectares were lost and how much yields and total production have been lost. They are not offering 2017 old crop peanuts nor 2018 new crop peanuts as they are not available.

    Brazil’s peanut merchants have also now withdrawn from any near-term export sales, waiting for that information on the Argentine crop, as well as to gauge their own crop. Brazil’s harvest is underway and should mostly wrap up in mid-Arpil.

    Brazilian exporters have pulled back on offers for 2018 new crop peanuts.

    La Niña and the severe drought in Argentina will mark the rhythm of the world peanut market.

    And any real assessment of the Argentine crop won’t be known until digging starts and combines begin moving through the field.

    Until Brazil moves farther into harvest, the U.S. is the only origin that has ready stocks of edible peanuts that would easily comply with European requirements and is in a position to supply that market.

    It is not an exaggeration to say that Argentina’s losses are steering more of the world’s peanut demand to the U.S. and Brazil.

    See related article here.

    Andrés H. “Hari” Georgalos
    Georgalos Peanut World
    Sarmiento 1664 – (X5960ETY) Río Segundo – Cba – Argentina
    Tel / Fax: +54 (0) 3572 42 1809
    E-Mail: <ahgeorgalos@arnet.com.ar>
    Skype: ahgeorgalos1




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