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Crop declines in several groundnut-producing countries are pushing prices up. The announced drop in Chinese production could benefit the African market, if confirmed.
The groundnut marketing campaign bodes well for West Africa. It begins with prices up compared to last year, prices driven by those of imported edible oils which generate an increase in local demand. In Burkina Faso, the price of a liter produced locally was a few days ago around 1,000 CFA francs against 1,200 to 1,500 CFA francs per imported liter.
Internationally, the upward trend is also being felt. It is fueled by an announced decline in Chinese production, the world’s largest consumer. According to the agricultural information service N’Kalô, the rise in corn prices has pushed Chinese producers to turn away from groundnuts. Unfavorable weather conditions should contribute to the decrease in volumes.
A Chinese harvest down 10 to 20%
In the absence of reliable data available, the question is to accurately assess the decline, to understand the impact it will have on the market. Estimates by professionals in the sector vary between 10 and 20% less compared to last year. Knowing that a drop of only 10% would already represent 2 million tonnes and would be enough to boost imports.
The other variable being the lifting of health restrictions which is taking shape and which could, if confirmed, boost domestic demand even more. And therefore the demand for African groundnuts to be processed. According to the IHS Markit economic bulletin, Chinese buyers have already made a strong comeback in Sudan since October to buy groundnuts and sesame.
Areas down in Argentina
The market is also supported by the announced drop in American production. And also by a reduction in planting areas in the other peanut giant: Argentina: the estimates relayed by IHS Markit report areas reduced by 5 to 15% due to the soaring price of fertilizers, but also structural problems, explains agricultural expert François Griffon.
In this context, prices are only likely to remain on an upward slope, according to Alimenta Agri, a US trader, which predicts a global peanut shortage.