What is in this article?:
- China continues to play a major role in the worldwide peanut market.
- China's peanut exports have slowly declined over the past decade.
- U.S. peanut prices are expected to be at more normal levels in the coming year.
WILLIAM GEORGE, LEFT, senior agriculture economist with the USDA Foreign Agriculture Service, is shown here with Stanley Fletcher, University of Georgia agricultural economist , during this year's annual meeting of the American Peanut Research & Education Society in Young Harris, Ga.
Lower quality peanuts
A lower average unit value corresponds to the export increase and supports the story that many of the peanuts sold to Chinese buyers were lower quality nuts, priced accordingly and drawn from stocks carried-over from earlier harvests. This fits the pattern observed with the earlier surge in Indian sales.”
Looking at Indian exports and comparing that with imports by Vietnam and China, much of the increase in Indian exports can be accounted for, says George.
“And while we do not have any hard evidence that exports to Vietnam were in fact destined to China, there is enough circumstantial evidence to suggest that this may have been the case.
“Most importantly is the fact that nearly all of the U.S. peanuts purchased by Chinese buyers have been shipped to Vietnam. Regardless, given the lower value of these purchases, it would appear these peanuts would either end up being crushed or displacing other peanuts from the edible market that were crushed.”
Given the trends observed in the peanut market, it’s possible to derive a few expectations for the future with a modest amount of confidence, says George.
“Given the improved growing conditions and large crop harvested in the U.S. in 2012, and lack of any significant weather problems impacting the U.S. or other peanut production in 2013, peanut prices should continue to decline to more normal levels.
“The recent increases in Indian and U.S. exports also have reduced supplies of excess peanuts in both countries and will make it more difficult to secure large quantities of peanuts at discounted prices.
“As it was this combination of high prices and availability of off-quality peanuts that provided a profitable situation for Chinese buyers, a return to a more normal supply and price regime will likely reduce the level of opportunistic sales.”
Regarding China’s exports, the factors driving the long-term decline are still in play, he says. However, with exports of raw shelled peanuts falling below 200,000 tons, it is unlikely that there is sufficient volume left to afford much more decline in this sector.
“This leaves both processed peanuts and in-shell peanuts as possible sectors that could see reduced exports. We have seen declines in these sectors over the last two years.
“However, market conditions were unusual over the past few years so I would feel more comfortable with a few more trend years to confidently forecast declines in processed and in-shell peanuts.
“What I can say is that China will remain an important player in peanut export markets and is unlikely to abandon sales of higher valued peanuts. That said, slowing exports of Chinese peanuts would present opportunities for exporters.”