[Domestic News]Mysteel Interpretation: National Peanut Prices Predominantly Exhibiting Weak Fluctuations

In early September, the weather in the Henan production area improved, and the local spring peanuts began to be fully available on the market. The increase in the supply of peanuts in the region prompted some oil mills to enter the market for purchases, providing some support to the market prices. However, middlemen were cautious about entering the market due to the high peanut prices, leading to a gradual increase in selling pressure in the production area. Small-scale buyers faced significant pressure in their purchases, causing a weak adjustment in the peanut market. As of September 27th, the national average price for peanuts per ton was 10,940 yuan, a decrease of 1,120 yuan per ton, or 9.28%, compared to the previous period, but an increase of 644 yuan per ton, or 5.88%, year-on-year.

Market Review:

Based on the comparison of peanut prices around the National Day holiday in the past five years, both 2019 and 2021 saw a downward trend in peanut prices. Looking back at those years, the volume of peanuts being delivered from the producing areas typically began to concentrate on the market after the National Day holiday, and stockpiling before the Mid-Autumn Festival essentially ended, leading to weaker demand after the holiday. Major oil factories delayed their market entry, with Longda Factory in Kaifeng entering the market for purchasing on October 21st, with a purchase price of 7200-7500 yuan per ton for oil-bearing peanuts, and purchase criteria including an oil content of 43%, moisture content below 9%, acid value below 1.5%, impurities below 1%, over 60% passing through a 7-mesh sieve, and less than 20% retained below the sieve. Lu Hua Factory entered the market for purchasing in mid-November, increasing supply-side pressure, and causing a significant decline in peanut prices.

Looking back at 2020, the domestic peanut supply and demand situation was in a tight balance, with low participation from oil mills and stable market procurement volumes. Peanut prices experienced fluctuations around the National Day holiday.

From the perspective of 2022, the weather in peanut-producing regions has been quite unpredictable, leading to a significant decrease in both the planting area and yield in China. In particular, the peanut planting area in Henan province has dropped by 30%. On September 8th, the Longda Factory in Kaifeng entered the market for purchasing peanuts at a price range of 9,960 to 9,980 yuan per ton. The specified quality criteria are as follows: minimum oil content of 46%, acid value of 1.2%, and 80% passing through a 6.5 sieve. It's evident that producers in the peanut-growing regions are determined to hold onto their prices, and the market is increasingly concerned about the scarcity of supply. High purchase prices by oil factories are driving rapid price increases.

After the holiday forecast:

From this year's perspective, the soil moisture in the Northeast and Shandong production areas is good, and the overall yield is excellent. Due to regional differences in performance, it is expected that yields will increase by 5% to 15% compared to last year. After the National Day holiday, all production areas will usher in a comprehensive listing. Although major oil companies have already entered the market for procurement, the initial prices provide some support to the market. However, the newly listed peanuts have higher moisture content, and the demand on the food side is not as satisfactory, which puts pressure on the oil companies' procurement. Oil companies have flexible procurement policies, and there is a risk of price reduction at any time.

It is worth noting that according to data from the China Meteorological Administration, Henan is expected to continue to experience rainy weather in the next 6 days, which may delay the harvest of peanuts, disrupting the timing of concentrated peanut listings. However, overall, the increase in supply after the holiday remains unchanged. In the future, it is important to pay attention to post-holiday market demand and weather changes. It is expected that peanut prices in China will mainly show a weak and fluctuating trend.

Source：Mysteel