World Peanut Meeting Report September 2021 (UPDATED)

A World Peanut Meeting was held a few days ago included several industry leaders as they showed the changes in trends and market demand for the peanut industry. This conference was particularly insightful as it was able to provide keynotes about the industry and its future. 

Demand Side Of Things

According to the European Union and the United States, demand for peanuts has increased by 3% and 4%, respectively. This increase is felt in China since it imported 3 million tonnes in 2020, including peanuts kernels, in-shell peanuts, and peanut oil.

While this would be seen as a positive for the industry in any other circumstances, complexities are arising due to shipping and logistic issues. We will discuss this in further detail below.

Supply Side

Argentina has been responsible for more than 70% of peanut crops already sold this year. It has been revealed that there has been an increase in Brazilian and Argentinian crops, in both cases, due to an increase in hectares planted, but with a lower yield.

Similarly, China and India are also experiencing good crops, with China supplying the majority of them due to the climatic problems faced in India. However, the supply is expected to return to normal shortly. The United States is also expected to have a normal harvest with no risk of hurricanes in the coming months.

Freight Costs And Other Issues

During 2020 the prices and volumes were very high, and this affected the whole market prices. Availability of vessels is decreasing by the month, as fewer ships are coming to South America. Freight costs for ports in Asia have increased more than 100%, and freight costs for North America and America Latina have increased more than 200%! 

Contracts during last week were done with a freight cost clause (if freight costs change by more than 10% during the loading period vs. the contracted period - where freight costs are detailed - ), the prices will be adjusted (in both cases, if costs go up or down). On FOB prices have not been changed, it is stable.

What Will The Market Look Like In 2022?

The situation for 2022 is defined as land is about to be planted for the next crops during October and November. There has been an increase of 20% in renting costs, which means a higher yield for 2022 crops is needed to keep the same price levels. If this doesn’t happen, the 2022 crop will be offered at least 50 USD per ton, more expensive than 2021.