The following was compiled from various international reports:
USA: With no 2016 crop surplus business in the EU from this origin remains quiet. Buyers are either waiting for the new US crop or looking to other origins. US exporters are not eager to ship to EU either due to high (15 – 20%) aflatoxin rejection rate. Buyers think that prices may come down as long as quality or other issues does not occur in other origins. “The predicted carry out for 2017 crop of 887 000tons does not leave much room for crop problems and quality issues…in which case availability will be tight and prices will show this.”
Some interest are shown in the 2017 crop which are now being planted (25% completed by 7 May), but very little are on offer and even less are actually contracted. The major factors seems to be the Argentina crop – if the crop is smaller; delayed or have quality issues, export prices will remain as is or increase for the 2017 USA crop.
CHINA: Even though prices are now lower than previous years, very low demand from EU for Chinese product. No prices for the new crop discussed yet as the crop still to be planted.
“From the domestic side, the oil crushers have been reducing their buying prices constantly, resulting in lower prices for export material. We believe this situation will remain for the upcoming weeks and that not much will change. But as mentioned in our previous issue, we think prices will go up as per June/July when summer has come, increase on infestation, and causing exporters to collect the material and store them at cold storage etc. Costs that will definitely be reflected in the export prices.”
Due to drought in Northern China, planting is reportedly delayed by at least two weeks but farmers in Shandong are beginning planting since rainfall last week. China has decreased VAT for peanuts from 13% to 11%. The import duty remains at 15% (with the exception of Senegal) making the total import tax 26%.
ARGENTINA: An increase of up to 32% (in shell) production compared the previous season was reported. This increase was expected due to good growing conditions and technological development. But this was before heavy rainfall and flooding began during early April and now losses of between 15% and 20% are mentioned. During the weekend of 6-7 May, one to four inches of rain stopped harvesting again for a few days. At this time, about 60% has been dug and between 10 – 20% has been harvested (depending on different reports). Forecast predict more rain for later this week and weekend which may continue to negatively influence harvesting.
In light of the good crop predicted, buyers have not contracted much yet. Some shellers are still not in the market and pre-season sales are limited. Possible delays due to recent weather and waterlogged fields may delay deliveries which could put pressure on the spot market in weeks to come. This might have an influence on prices and other origins. According to some queries, there are many producers who claim that the situation is worse than “the one considered as very harmful last year”. The Argentine Peanut Chamber predicts that up to 40,000 to 50,000 hectares could be lost this year due to the excessive rains.
One of the reports state : “The first peanut production estimate by the Cordoba Grain Exchange of last month showed 795,500 MT of edible peanuts, looking at the figures above there is a 17% gap between estimation and reality. And we still have roughly 75% to be harvested, so our confidence that Argentina will have a great crop as expected slips away by the minute.
The European buyers are eager to receive their first shipments with most buyers would be only covered until the end of August 2017.” Confirmation of the hectares lost due to flooding and lack of soil will only be known by the end of June 2017.
“…Argentina is a key supplier to the West European market. Any further problems with the 2017 crop would result in a rapid rise of prices. There is still plenty of buying that has to be done by the Europeans. The good Brazilian crop will help some, but many cannot buy Brazilian peanuts. The US can hopefully help some with the 2017 crop but at higher prices, and let’s not forget that we have yet to plant that crop. So it goes without saying that European buyers are concerned and watching the weather carefully. Having said that, prices could also have some pressure should the weather cooperates.” There have been some reports that land rent for next year could be much higher than this year. Something to watch as it could obviously impact 2018 crop prices, but also potentially 2017 crop prices later in the season.
BRAZIL: Increased their prices due to the immediate availability of shipments that would compensate for the relative delay from the Argentina, however, this origin is not acceptable to all buyers (higher aflatoxin risk and poor selection quality) and other origins might be able to fill this need. For this reason Brazil also prefers to ship blanched product rather than raw.
“High temperatures of January and February, lower rainfall levels in the second half February offered good conditions for harvesting activities but affect a little the productivity. The normal rain levels last few weeks guarantee the conclusion of the crop with some risks of drought at the end but without risks of uninterrupted rains, low aflatoxin levels detected.”
The harvesting of the crop is basically completed with shellers reporting a good crop – both in terms of quantity and quality. Late rain though seem to have impacted about 40% of the crop, but in general yields are very good. The crop was originally expected at 550 000mt kernels, but could be now around 470 000mt.
SOUTH AFRICA: As reported before, the latest official production forecast (25th April 2017) kept the expected crop at 86 600mt. Harvesting is in progress and it will become clearer in coming weeks if this estimate are being realised, but reports are positive. According to some reports, there seems to be some role-players that feel that the estimate is slightly too high and could be 10 – 15% lower than projected.
In any case, compared to the disastrous 2016 crop, this still looks positive. One should however remember that this is not an above normal crop for South Africa. Due to drier weather and late rains the last two to three seasons, there was a decline in production, however, this is by no means a ‘large’ crop when compared to earlier crops, but could mean that we can return to our ‘normal’ exports this year.
Prices have come down somewhat from the initial offers made pre-season – surely also due to the weaker local currency – but depending on the situation in Argentina and the buyers’ need to cover possible delays or shortages, prices might follow the market.
Please feel free to contact me should you have any comments or enquiries.
Chairperson: SA Groundnut Forum