The international peanut market has clearly turned into a weather market and it will take time to gain a clear view of all the factors that will influence pricing.
The high-quality peanut market – defined by European Union (EU) specifications – has been stressed by uncertainty and production shortfalls.
In South Africa, estimated peanut plantings reached only 19,200 hectares (47,400 acres) – off 66% compared to the previous year’s crop. There will definitely be a major shortage situation. South Africa will have to rely on imports of EU-spec high-quality peanuts because the country’s crop cannot meet the total domestic demand.
Brazil peanuts – both raw and blanched – are the best option, together with some supplies from Argentina. However, weather conditions will likely affect peanut yields and quality in both countries
In Brazil, part of the new 2019 peanut crop endured drought in December and January, which will cut per-hectare averages and also reduce the size of the peanuts. With drought, there also is the chance that aflatoxin could turn up in some lots.
Shellers and exporters fear that these conditions already have affected average yields, peanut size and quality – although it’s difficult to estimate any of those factors right now.
With all that, prices on the world market went up sharply.
Farmers And Shellers Take To The Sidelines
Most shellers and exporters in Brazil and Argentina have increase prices for raw and blanched peanuts or have withdrawn from the market until they gain a better feel for what to expect in terms of crop size and quality.
Due to what they have seen during harvest, farmers also have increased their prices to shellers or have pulled back from any immediate crop marketing.
Overall, prices are going up and up and the majority of Argentina’s exporters are now on the sidelines.
So far, we have seen a wide range in prices over the past few weeks from USD/MT 1,500 to USD/MT 1,630 CFR basis, according to shipment period and quality specs. That would be for 2019 blanched runner jumbos.
Here in Argentina, the weather shows little sign of improving. Some isolated rains fell in the past few days but it has been considerably dry in a significant portion of the production area for the last 20 days. The forecast shows no relief in the near-term period.
The lack of rain and high temperatures are affecting peanuts in our central production area. So far, little or no rain has been recorded in February in the Peanut Belt of Cordoba. In places, plants are clearly wilting.
Any supply or pricing effect from the 2019 U.S. crop remains uncertain. It will be difficult to find offers for EU-spec peanuts soon since planting there has yet to start.