In a typical year, about a quarter of the U.S. peanut crop is exported to foreign countries with the primary destinations being Canada and Mexico. As seen in Figure 1, these two closest neighbors to the U.S. have continued a steady growth of purchasing of U.S. peanut products. This has provided a stable base to the peanut export market over the years, accounting for between 33% and 48% of the overall exports during the last five years. This trend has continued in 2021, where the period of January to July has seen a 5% increase in exports to Canada and Mexico compared to the same period during 2020.
Alternatively, China has been a relatively new buyer of U.S. peanuts over the last decade. Early in the decade, China had purchased U.S. peanuts through third-country agreements, The first substantial shipments directly to China came in 2016 when low priced in-shell peanuts were purchased for oil production. After buying 30% of the U.S. exports in 2016, China pulled back in subsequent years, averaging roughly 13% of the U.S. export market from 2017-2019. While this did result in a general upward trend in overall exports (excluding 2016), a combination of trade disputes, tariffs and higher prices played a factor in the decline of exports to China after 2016. In 2020, China once again substantially increased their purchasing to a record level for that country. However, from January to July 2021, exports to China have dropped 55% compared to the same period in 2020. At the current pace, this will result in the third highest export quantity to China.
While it is promising in terms of trade with China, competition from India, higher prices, and the potential for current purchases being related to the Phase One trade agreement raise questions about the stability of peanut exports to that market.
The European Union (E.U.) is another market of concern, with export quantities included in the rest of the world data in Figure 1. Challenges with trade to the E.U. have focused on aflatoxin testing where standards target a four (4) parts per billion (ppb) aflatoxin level instead of the U.S. 15 ppb. Furthermore, with at least 10% of the shipments being subject to testing and failed shipments being returned or requiring cleaning, there are concerns about sending peanuts to that market. While peanut exports to the rest of the world are up 17% for the period of January to July 2021 compared to the same period in 2020, they are down 40% compared to the same period in 2019. All things considered for the peanut market, trade to Canada and Mexico provides the stable foundation for what appears to be a changing landscape of export markets for the industry.
Source: Data from the USDA Foreign Agricultural Service
Rabinowitz, Adam. “Exports to Canada and Mexico Provide Stability to Peanut Market.” Southern Ag Today 1(43.1d). October 18, 2021. Permalink