Sao Paulo's 2023/2024 Peanut Harvest Predicted to Decrease

Impact of Drought on São Paulo’s Peanut Harvest

São Paulo's peanut harvest for the 2023/2024 season is expected to yield approximately 713.5 thousand tons, marking a decline from the previous year's output of 736 thousand tons. This reduction can be attributed to inadequate rainfall, particularly in December.

Key Takeaways

• São Paulo anticipates a reduced peanut harvest of 713.5 thousand tons for 2023/2024, compared to 736 thousand tons in the previous season, due to rainfall shortages.
• The drought has negatively impacted peanut quality, posing challenges in meeting external market standards and leading to unemployment in the sector.
• Limited peanut availability, coupled with rising international demand for peanut oil, is driving up costs for consumers and businesses.
• Export taxes, freight expenses, and disruptions in the supply chain are impacting the profitability and availability of peanut oil, contributing to price hikes.
• Heightened prices of alternative oils are exerting pressure on peanut oil prices as consumers seek substitutes, further driving up its cost.

Analysis

The dip in São Paulo's 2023/2024 peanut harvest, projected at 713.5 thousand tons, stems from insufficient rainfall, affecting both yield and quality. This shortfall is expected to strain the peanut industry, leading to unemployment and constraining peanut and peanut oil supplies for export. As a result, consumers and businesses will face escalated costs. Meanwhile, export levies, freight charges, and supply chain disruptions will further diminish the profitability and availability of peanut oil, driving prices upwards. Additionally, the inflated prices of alternative oils may further push up peanut oil prices as consumers explore substitutes. This situation is likely to have a notable impact on countries reliant on Brazilian peanut exports and businesses utilizing peanut oil, such as food manufacturers. It may also prompt investments in agricultural technology and drought-resistant crops for the region.

Did You Know?

• Peanut Oil: Renowned for its mild flavor and high smoke point, peanut oil is a popular choice for cooking and finds use in the production of biodiesel and cosmetics. The surge in global demand for peanut oil, compounded by export taxes, freight costs, and supply chain disruptions, has resulted in increased expenses for consumers and businesses.
• Export taxes: Imposed on goods or services sold to other countries, export taxes can reduce the profitability of exports, elevating costs for foreign buyers and subsequently impacting domestic market prices.
• Supply chain disruptions: A myriad of factors, including natural calamities, political instability, and transportation issues, can lead to supply chain disruptions. In the case of peanuts and peanut oil, these disruptions can curtail availability and elevate prices. Export taxes and freight costs can exacerbate these disruptions, further driving prices upward.