Herman Driesens, manager at Amberwood Rotterdam, regularly publishes peanut market updates on LinkedIn. The below is a quick overview of their findings in January 2020. Since their last market report from October 2019, the peanut market has changed significantly. Besides the fact that limited quantities of peanuts are available and offered, they have also seen, as a result of that, an increase in prices of 150 to 200 USD per mt in just a few weeks.
Because of the crop issues in the US, the fact that Brazil is already sold out for months and China continuing to have a firm domestic market with very high prices, it is Argentina being the only origin in position to offer peanuts for the first half of 2020. However, several or probably most shellers in Argentina are already sold out on the main grades which doesn’t make the situation easier.
Luckily the situation, in both Brazil and Argentina, as far as the condition of the new crop is concerned has improved a lot. Both origins were happy to receive very good and badly needed general rains during the Christmas – New Year holidays which helped a lot. Both origins will be needing more rain during the next few (hot and dry) months of January and February.
Argentine shellers are, thanks to the new government, confronted with a 12% export tax which means an increase of 7% compared to the previous export tax situation. Although Argentina will have to follow the world market it seems obvious that Argentina is needing a good and high yielding crop to overcome this new export tax on top of several other (new) regulations affecting them also in a negative way.
Although the USA crop came out even bigger in volume than most people expected, the quality is very poor. The SE is suffering from high aflatoxin with EU spec material very difficult to find and if so, it requires a very high premium. Even max 5 and 10 ppb material is basically not around. The SW also had weather issues more related to cold, rainy weather (freeze damage) and is also not in position to offer high quality material besides what was sold earlier.
New crop in Brazil seems in very good shape looking at the comments and photos received by Amberwood Rotterdam. Nevertheless, Herman sees Brazilian shellers acting very carefully in forward offering after the lessons learned last season. Several 2019 crop contracts will have to be fulfilled with 2020 crop peanuts in the period March/June or April/July if the crop will be late which seems logical after plantings were delayed earlier.
From India, Amberwood Rotterdam received the following report:
“The Indian market ended the year 2019 with a firm undertone for a number of reasons:
- Very good local demand from oil companies and local retail sale.
- Support from Palm, Soya as well as other edible oils.
- Demand for planting seed in some areas.
- Farmers expecting better prices and holding cargo due to the increase.
Most of these factors are easing out now and while markets have not come back to the levels of November, they are surely off their peaks for now. There is demand from China at certain price levels and we also have a small but steady stream of business to other destinations so there is almost a matching between demand and supply for now.
Government purchases continue for now at a slow but steady pace in many parts of the country but with peak arrivals tapering off we may see some slow down here after the end of the month.
Quality is a bit of a challenge for EU destinations as the excess and untimely rain has had some unseen impact on Aflatoxin levels. At the same time, with a bigger crop we don’t have much of the smaller sizes and 40/50s on the bolds and 50/60s on the Javas are the easiest in terms of recoveries”
It seems quite clear that in case we run into weather issues in Argentina or Brazil (or both) in the next few months, this market can go up even further. It will also be interesting to see if the US will increase plantings after this year’s bad quality crop.