Peanuts: the festival is approaching, and the goods are ready

[Data Map]

Peanut futures have started a period of oscillatory upward trend since the end of May. The main reasons are as follows: First, seasonality. June to August is the off-season for the purchase and sale of peanuts. The transaction of the main circulation of old peanuts is nearing the end. Affected by the production reduction in 2022, there is less surplus in the production area. After March, the import of peanuts to Hong Kong peaked and fell back, and the spot supply was tight. Second, the planting area of spring peanut in the new season decreased by 35% year on year, significantly reducing for two consecutive years. Against the background of expected decline in planting area, the tolerance rate for weather is low. Third, the supply and demand balance of US soybeans in the new season was tight, the Black Sea grain export agreement was suspended, and the impact of El Ni ñ o on the global climate raised the prices of bulk oil and protein meal, forming a positive expectation for the consumption of peanut oil and meal. Fourth, Sudan's armed conflict continues to ferment, overlapping with the flower production area, which is expected to have a greater impact on the peanut import volume in 2023/2024. On the whole, before a large number of new works came into the market, peanuts were still in a pattern of weak supply and demand, or would continue to maintain a strong trend of oscillation.

In 2022, the peanut planting area in China will decrease by 18.71% year-on-year to 50.7723 million mu, and the unit yield is estimated to decrease by 5% year-on-year. In 2022, China's peanut output will reach 13.199 million tons, a year-on-year decrease of 19.57%, and the yield reduction rate will be at a historical high. Affected by the production reduction in 2022, the inventory of old crops in the production area basically bottomed out in July and August. The number of imported peanuts dropped in March. According to the data, China imported 23300 tons of peanuts in July 2023, down 60.24% month on month and 66.76% year on year. The import of peanuts in the second quarter totaled 270300 tons, down 14.33% month on month and 12.75% year on year. In the period of shortage, supply was generally tight.

Due to the high grain price in the past two years, the planting income of wheat stubble peanut and wheat rotation is higher than that of spring peanut. The planting area of spring peanut in 2023 will decrease by 35% year on year. However, the planting income of peanut in 2023 will be significantly improved compared with that of corn and other crops, and the planting area of summer peanut will be recovered and the overall planting area of peanut will increase by 11% - 15% year on year, But less than 2021. Due to the low inventory of old crops in the production area and the rise of overlapping planting costs, it is estimated that the initial weighing price of new crops is likely to be higher at the initial stage of listing. In addition, from the weather conditions in the production area, there is ponding in the low-lying areas of Jilin, or it has a negative impact on the unit yield of peanuts, and the uncertainty of new fruit listing is still large. At present, the trend of PK2401 contract mainly reflects the expectation of the listing of new works, and the current strong trend of the contract can also reflect the market's concern about the listing of new works.

Since the beginning of this year, the profit of peanut crushing plants has continued to be negative, and the crushing profit has continued to deteriorate. Due to the continuous negative value of the crushing profit, private oil plants have been unprofitable in squeezing first-class oil. The operating rate of the oil plant remains low. At the beginning of July, the squeezing profit bottomed out and recovered, which played a positive role in stimulating the increase of the operating rate of the oil factory. As of August 24, the average weekly loss of the squeezing profit of the oil factory was 165.50 yuan/ton, 48.62% less than the loss of the previous week. After about 10 months of destocking, the press plant has a certain demand for replenishment. As the Mid Autumn Festival and the National Day are approaching, the downstream stock preparation is gradually starting. As of August 24, the estimated inventory is 1990 tons, with a month on month decrease of 18.1%. The festival consumption effect will also have a certain supporting effect on the contract price in recent months.

Under the background that the inventory transaction is nearing the end, the current focus is on the downstream consumption boost and the impact of weather on the growth of peanuts in the production area. Before a large number of new products are listed, peanuts are expected to maintain a tight balance between supply and demand, and maintain a strong trend of price oscillation. (Author's unit: Changjiang Futures)

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