Peanuts: tide is about to turn

Shifting dynamics in India

Feeling in India is that the tide is about to turn, question is in what direction. Current impression is that the market is highly polarised. Two drivers will impact developments in the next few weeks. The first is demand and the second is the weather. While exporters in India are presently relying on subtle but continuous demand in south-east Asian countries such as Vietnam, the Philippines and Indonesia, a silent shift is being observed as Indonesia has booked large consignments from Mozambique that are posing quite a challenge for selling the Indian crop.

Rain and high temperatures are also disrupting internal trade. Issue is that farmers cannot store supplies in these conditions, which will prompt them to immediately bring their volumes to the market. This will create a huge inward pressure and may prompt rates to drop by 3-4%. As heavy rains have occurred in several areas in Uttar Pradesh the inflow will be lower than anticipated. Local surveys indicate that if the rains continue crop damages may occur. Regional polarisation is further complicating forecasts. In the major spot market of Banaskantha traders and stockist are, for instance, buying up supplies of high-quality 80-90 count Java nuts with attractive prices, whereas such inclinations cannot be observed in other regions. Yields are, however, good in West Bengal. Yet, the crop is not entering the domestic market as local traders assert that 70% will be exported directly.

In general, the peanut market in India is posed for significant changes in the coming months with potential shortages of good-quality nuts and fluctuating prices expected. The upcoming festive season will also drive up domestic demand. Exporters will need to monitor several factors to make informed decisions. Bold peanuts are trading roughly on par with last year and Java peanuts much lower.

Global production to flatline in 2024/2025

According to the figures presented at the International Nut and Dried Council (INC) Congress in May global in-shell production will flatline at 50 million mt. Despite expectations being that production will decline by 2%, China will retain its position as leading producing country. News so far is that the plants are developing well. Output in India will range a bit higher in 2024/2025, whereas Nigeria will witness a nominal decline.

An increase in acreage coupled with good management will drive US production up by 11%. Yet, the first USDA planted crop estimate revealed a 1% decrease in acreage, primarily due to drought issues in Texas. Planted acreage has, however, risen by 7% in the Southeast. Most analysts agree that this increase will not flood the markets. But if the crop proves abundant, the carryforward could help stabilise the market. With four months left this season the industry is on track to meet the USDA farmers’ stock estimate of 725,000 mt. Export demand for US peanuts is tightening supplies well before the 2024 crop can be grown and warehoused. The two strongest markets, Mexico and Canada, continue to perform well, accounting for 25% and 22% of the export volume respectively.

While the INC anticipates a 51% rise in Argentina, the USDA is more cautious in predicting production at 1.35 million mt with the planted area ranging at 400,000 acres and yields at 3.4-3.5 tons/ha. However, recent high humidity and drizzle have slowed the harvest process. If the weather does not improve soon, this could impact overall yields. According to INC estimates rains and floods will reduce output in Brazil by 22%. Brazilian processors are currently making few offers, leading many shellers to source peanuts from Argentina to fulfil existing open contracts. This reliance on Argentine supplies indicates a tightening of the Brazilian peanut market. As the situation develops, processors will need to navigate these supply constraints while ensuring they meet their contractual obligations. The INC estimates total supplies at 54.298 million mt in 2024/2025, which is a nominal 0.6% up on the 53.924 million mt registered in 2023/2024.

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