Heavy Rains Threaten to Reduce Peanut Production in Argentina

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Spend Matters welcomes this guest post by Jara Zicha of Mintec.

Over the last 35 years the nut industry has expanded with ever increasing production, closely linked to demand and more efficient global logistic chains. For those not familiar with the market, the four most important nuts are almonds, pistachios, walnuts and cashews. However, from a U.S. perspective, peanuts are certainly on par with almonds. Even though the southern states of the U.S. produce peanuts, the U.S. relies on trading partners like Argentina to support its industry.

Delays in peanut harvest in Argentina, due to weather related problems, have put peanut markets under pressure in recent months. Argentina is one of the world’s major producers, behind China, Nigeria, India and the U.S. Although the volume of its crop is relatively low (1m tonnes) compared to China (17m tonnes), Argentina is the top exporter for peanuts, responsible for 25% of the global exports.

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This year’s production, as estimated by Cordoba Grain Exchange in June, has been projected at 916,000 tonnes, down 23% year-on-year, following a decrease in planted area, which has fallen 5% y-o-y to about 817,400 acres and a reduction in yields. The decline in planted area is a result of falling peanut prices prompting farmers to switch to other crops, mainly corn. Prior to the latest price increase, Argentine peanut prices were down 12% y-o-y and also 14% below 10-year average.

Concerns over lower production have intensified lately due to adverse weather during the harvest. Almost 84,000 acres (10% of total) have been abandoned mainly due to unseasonably heavy rains in April and May, which have delayed harvest in the main growing regions of Cordoba, La Pampa and San Luis. Estimated initially at 1 million tonnes in April, the production has been revised down 8% in June due to wet weather and subsequent reduction in yields. The longer the nuts stay in the field, the lower the expected yields. In addition, high-moisture nuts have to be mechanically dried, which further complicates logistics and adds additional costs to processing.

Delayed harvest and uncertainty about the new Argentine crop has been noted by other major producers, who have been closely watching crop development in Argentina and will certainly want to take advantage of higher international prices. Indeed, since the delays in harvest from Argentina were reported, U.S. peanut prices have climbed by 27%.

First Voice

  1. Raj Patel:

    what will be the production of peanut for Argentina 2016 & united state of america 2016

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