Herman Driesens, manager at Amberwood Rotterdam, regularly publishes peanut market updates on LinkedIn. This is a quick overview of their findings in October 2019.
First of all, the USA. Due to a long period of high temperatures and almost no rain the SE the quality and quantity has been affected badly and although it started to rain about 2 weeks ago this hasn’t improved that situation. At first the rain was welcome in order to loosen the soil and continue digging and harvesting but later on it also caused harvesting delays. Roughly 90% should have been harvested by now in the SE. No offers available on EU spec material for the time being.
The crop in the VC is in much better condition although it has also slowed down due to rainfall. Harvesting seems almost completed by now. Also, the Delta region (Arkansas, Mississippi, Louisiana) seems to be in better shape than the SE although they also experienced some delay in harvesting. In the SW the crop and quality are also considered to be good but shellers have to keep an eye on possible freezing temperatures to avoid damage to the crop.
Other issues related to the USA are the increased import controls as well as the uncertainties with a potential EU tariff on USA peanuts, although Amberwood Rotterdam does not expect a decision on this before April/May 2020. A positive note for the US is the fact that US peanuts are now allowed again to be exported to Russia. Another positive factor might be the much firmer domestic market in China which may create some opportunities for US exports of FS despite the high import tariff.
In Argentina shellers are, despite going through political and economic difficult times, enjoying a big and good quality crop after 3 years of smaller and lower quality crops. Recently the Cámara del Mani estimated that Argentina should have 663,000 mtons available for export which means over 200,000 more than last year and of much better quality. It might proof difficult to find enough bird food offers at this point. Argentina exported over 220,000 mtons in the first 4 months which is quite amazing but on the other hand quite logical knowing the difficulties Brazil has with their 2019 crop and the problems the USA had with their 2018 crop.
It looks like Argentina is very well sold (over 80% on average) which is also remarkable knowing that it will take another 6 to 7 months before the next crop is available from Argentina. Expectations are that Argentina will plant roughly 12% less than last year which can be explained by the political and economic difficult circumstances, export taxes (which may increase), higher prices to rent suitable land and less possibilities for shellers to receive loans from the bank.
New crop plantings have started in some areas but Argentine shellers are also waiting for more rains. Right now, all the areas have received some or even enough rain to get started and plantings are moving forward but soil moisture levels are still quite low. However, so far so good.
Brazil is even waiting for more rains to plant the new crop especially in the Jaboticabal / Dumont area. The crop in Brazil will be delayed that is for sure. The Tupa / Marilia area received some good rains last week and re-started plantings after 25% of the area was planted earlier but stopped after getting too dry and too hot. The Jaboticabal / Dumont area has only planted 10 / 15% so far and definitely needs more rain soon. Some farmers decided to re-start plantings hoping things will change for the best at some point! Some shellers intend to plant more than last year and some shellers will reduce. Herman presumes overall the area will be more or less the same as last year provided rains will come. On 2019 crop Brazil is completely sold out after experiencing a difficult crop in regard to quantity (20/25% less than expected) and quality after the drought in Jan/Feb.
Domestic prices requested by farmers are very high and do not make much sense looking at the world market prices but maybe the domestic market has no other choice than to accept. For both Argentina and Brazil, the most important period is obviously January/February when it is their summer. China’s market surprisingly went up in less than a week time with more than USD 100 per mt. Difficult to understand why this is happening since there should be enough peanuts around but farmers and dealers (middlemen) are not selling awaiting better prices. Oil crushing companies say they have enough material in their hands, so they claim there is no need for them to buy right now. Chinese New Year will be early this year (3rd week of January) and this is too early for the arrival of new crop from Sudan and Senegal which can be an explanation for the sudden increase of the domestic market. Also, edible quality peanut prices have increased in the same way.
The Indian season was late with harvest by about 3 – 4 weeks due to the continuous rain fall between 15 Sept – 15 Oct and by the time arrivals could pick up, India went into their Diwali holidays. The market yards will resume on 1st November. In terms of crop size, everyone is confident that the numbers are fairly large and just Gujarat is expected at about 3 – 3.2 million tons of In-shells this year. To put it in perspective, India has a 5-year average of 2.3 – 2.4 million tons and last year was at 1.8 million tons. On an All – India would possibly be about 6.5 million tons for the winter crop. Starting 1st November, the government procurement will commence and we have to see how this goes as prices are already below support prices for some of the grades and there may be pressure on the government to buy more than what they have already promised / announced.
On the export side, Amberwood Rotterdam has confirmed news of about 1700 – 1800 fcls of peanuts traded to Hai Phong, Vietnam for shipment from India between 1st Nov – 15 Dec 2019. Other than this there has been the usual demand for the Javas into Indonesia, Malaysia etc. and would continue for the whole of November at least. In both cases, it’s a volume game and not much to speak of in terms of quality etc. Indian Peanut oil has also been traded to China in the USD. 1350 – 1380 levels. Low prices also mean cheaper peanut oil and better local consumption at our end but keeping the crop size in mind, there is more than enough to go around for everyone. In terms of prices there isn’t much change at all for now.