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W1 2025: Peanut Weekly Update

Published Jan 10, 2025
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In W1 in the peanut landscape, Brazil's peanut industry faces multiple challenges amid a potential policy shift and global weather disruptions. Accounting for 93% of the national production, São Paulo is debating revoking Article 351-A of the RICMS, which currently postpones ICMS taxes on peanut sales. If passed in Feb-25, this change could raise production costs, diminishing competitiveness and profitability for producers, processors, and cooperatives. Meanwhile, India's unseasonal rains severely damaged crops, exacerbating concerns over food security and prices. Similarly, due to soil moisture, Hurricane Willa stalled harvests in Mexico's Rodeo Municipality. In the US, peanut acreage in Arkansas expanded but faced yield declines due to extreme weather. Despite lower per-acre yields, total production increased by 18%. Concurrently, Brazil's peanut prices have decreased, reflecting both domestic policy uncertainty and global pressures, which pose significant risks to the sector's sustainability.

1. Weekly News

Brazil

Proposed ICMS Tax Change Threatens São Paulo's Peanut Industry

Contributing 93% to Brazil's peanut production, the state of São Paulo faces a potential challenge as the state government proposes to revoke Article 351-A of the Regulation of the Tax on the Circulation of Goods and Services (RICMS) through Official Letter No. 24/2024. Established under Decree No. 45,490/2000, this provision postponed the Tax on the Circulation of Goods and Services (ICMS), a state-level value-added tax (VAT), on domestic peanut sales, reducing immediate costs and enhancing the sector's competitiveness.

The proposed revocation, set for a February 2025 vote by the Legislative Assembly of São Paulo, has raised concerns from the Association of Peanut Producers, Processors, Exporters, and Industrializers of Brazil (Abex-BR) and the Peanut Sector Chamber. These groups warn that eliminating the tax postponement could undermine the sector's competitiveness and sustainability, negatively impacting the state's producers, processors, and cooperatives.

India

Unseasonal Rainfall Damages Peanuts in Kendrapada District

Unseasonal rainfall in India's Kendrapada district has severely impacted various crops, including peanuts, leading to concerns over food security and rising prices. Though local farmers dispute the official figures, the damage caused by the five-day downpour to ripe paddy crops is estimated to affect over 54,500 hectares (ha). Peanut crops were also affected, with waterlogged conditions destroying or severely damaging saplings.

Mexico

Hurricane Willa's Rains Disrupt Peanut Harvest in Rodeo Municipality

While beneficial for some agricultural activities in Mexico, Hurricane Willa's rains have halted the peanut harvest in Durango's Rodeo Municipality due to excessive soil moisture. The president of the Peanut Producers from the Municipality of Rodeo, a local cooperative, reported that the harvest, about 60% complete, could not proceed due to the risk of sprouting peanuts and bursting seeds. As of W1, the second crop, planted in Apr-24 and May-24, is being harvested, with approximately 100 ha dedicated to peanuts. This represents 50% of the municipality's total peanut area.

United States

Weather Challenges Impact Arkansas Peanut Production Despite Acreage Growth

Arkansas peanut acreage expanded significantly in 2024, rising to 44,000 acres, a 10,000-acre increase over 2023. However, unusual weather patterns, including a wet spring followed by hot, dry summer conditions and late-season rains, impacted yields. Average peanut production is estimated at 5,200 pounds (lbs) per acre, down 500 lbs from 2023. Despite the lower per-acre yield, the expanded acreage resulted in an 18% increase in total peanut production. Experts attribute the decrease in yield to the same weather challenges that affected other crops, including cotton, across the state.

2. Weekly Pricing

Weekly Peanut Pricing Important Exporters (USD/kg)

* All pricing is wholesale * Varieties: Argentina (unshelled), India (with shell), the US, and Brazil (overall peanut average)

Yearly Change in Peanut Pricing Important Exporters (W1 2024 to W1 2025)

* All pricing is wholesale * Varieties: Argentina (unshelled), India (with shell), the US, and Brazil (overall peanut average) * Blank spaces on the graph signify data unavailability stemming from factors like supply unavailability, missing data, or seasonality

United States

In W1, US peanut prices fell to USD 0.52 per kilogram (kg), down 1.89% week-on-week (WoW) and a 16.13% year-on-year (YoY) drop, driven by increased production despite weather challenges. Arkansas expanded peanut acreage to 44,000 acres but adverse weather reduced yields to 5,200 lbs/acre. Total production rose 18% due to larger acreage, contributing to supply growth. The price decline reflects surplus production pressures, with potential stabilization if export demand strengthens. Persistent weather risks and supply-demand imbalances may influence future price trends.

Brazil

Brazil's peanut prices have recently dropped to USD 2.68/kg in W1, reflecting a 6.29% WoW decrease and a 12.42% decline compared to the previous year. This downward price trend could be linked to multiple factors, including a potential policy change in São Paulo. Responsible for 93% of Brazil's peanut production, the state faces a challenge as it considers revoking Article 351-A of the RICMS, which currently delays the ICMS tax on domestic peanut sales. If passed in Feb-25, this policy shift could raise production costs, reducing competitiveness for local producers, processors, and cooperatives.

The proposed tax change could result in higher immediate costs for peanut businesses, potentially leading to further consumer price increases and a contraction in export opportunities. As a result, Brazil's peanut industry may see a decline in profitability, impacting both domestic prices and future production levels.

4. Actionable Recommendations

Advocate for Policy Stability

Brazilian peanut stakeholders should collaborate with industry associations such as Abex-BR to rally against revoking Article 351-A of the RICMS. Engaging policymakers through data-driven impact assessments and emphasizing the economic consequences of increased ICMS taxes on local competitiveness can help maintain the current tax postponement.

Enhance Risk Mitigation Through Global Sourcing and Diversification

Peanut importers and exporters should diversify sourcing strategies by exploring alternative supply regions, such as Argentina and the US, to offset potential disruptions in Brazil caused by policy shifts and declining prices. Establishing partnerships with reliable suppliers in these regions and considering multi-year contracts can ensure supply stability while minimizing exposure to regional risks, including adverse weather events and regulatory changes.

Invest in Climate-Resilient Practices and Technology

Peanut producers in Brazil, India, and other affected regions should adopt climate-resilient agricultural practices to address global weather-related disruptions. Investments in technologies such as drought-tolerant peanut varieties, improved irrigation systems, and precision farming can mitigate the effects of extreme weather. Governments and industry stakeholders can support these efforts through subsidies, technical assistance, and partnerships with agricultural research institutions, ensuring long-term sector sustainability and productivity.

Sources: Tridge, Canal Rural, Stuttgart Daily Leader, Times of India, El Sol de Durango

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