Nuts

Peanuts: market gears up for challenges

February 12, 2024 at 11:35 AM , Der AUDITOR
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NEW DELHI. India is gearing up for a sharp rise in arrivals. Aflatoxin is still an issue for US peanuts. Peanut oil suppliers are hoping that demand will pick up in China. Rain has worked wonders in Brazil but will prove a challenge for harvesting.

Downturn to gain momentum in India

Last week’s minor growth was only temporary. Peanuts are instead witnessing a downward trend now. One reason is the surprisingly sluggish domestic demand for peanut oil. While households normally stock up on peanut oil for an entire year, retail and wholesale demand only ranged at 25-35% this season. Domestic demand for peanuts is, however, steady. In addition, the cultivators in Rajasthan and Gujarat are selling cotton and holding on to peanuts this year, whereas the opposite was the case last year. Farmers still hold around 40% of their peanut stocks and will only release supplies slowly into the spot markets, despite the government guaranteeing a minimum support price of INR 63.

Yet, things may change quickly if the mercury level rises as major trading hubs will be bombarded with supplies and prices may slump for a short time of 10-15 days. Another aspect to consider is the disparity between the peanut and peanut oil prices. With 70% of the oil producing facilities closed and if demand in China fails to rise after February prices will continue to fall.

Poor quality has also hit exports and buyers are urged to play it by year rather than rush into action as arrivals will increase sharply. They are already picking up in Karnataka. Harvesting is starting in Tamil Nadu and in Orissa, where sowing has declined by 20% as compared with last year. In the interim budget the central government has, moreover, given special importance to oilseeds such as peanuts, soybeans and sesame, sunflower and mustard seeds to cover research for high-yielding varieties and improves market conditions. In addition, the goods and service tax (GST) will be reduced from 18% to 12% for agrochemicals.

Peanuts, with skin

Type

USD/mt

Bold, 40-50

1,370

Bold, 50-60

1,330

Bold, 60-70

1,315

Java, 50-60

1,405

Java, 60-70

1,320

Java, 70-80

1,325

FOB India, non-EU quality

Global challenges prevail

The global peanut market is gearing up for challenges as global supplies are confronted with uncertainty, snags may occur in Argentina and quality remains an issue in the US. In the US, the market is very much focused on medium and jumbo peanuts, which are quoted firm. Lower yields may hike the prices for Runner jumbos. Supplies are looking tight for the first quarter, especially for blanched wholes. The industry is crossing its fingers for price drops if the 2024 crop shapes up well. Aflatoxin is still an issue, which is impacting blanched and 32/42 varieties. Blanching capacities will be limited until May 2024. Raw peanuts are trading in a range of USD 1,800-1,900/mt CIF EU.

January showers worked wonders for the crop in Brazil, but heavy rains may well persist during the main harvest as was the case last year. The outlook is a bit uncertain and expectation is that the crop will be below average. Trouble is that although planting was 10-15% up on last season, weather conditions have been very dry since October, which should prevent an increase in volume. A clearer picture on yields and quality will emerge when harvesting starts in late February.

Trading is a bit sluggish in Senegal. This is mainly because prices range higher than last year and demand is lacking from China. Oil-crushing peanut grades are trading at USD 875-950/mt EXW and 55 grade nuts at USD 1,155/mt EXW.

 

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