As Peanut Prices Rally, China to Launch Futures Contract

The Chinese government announced it will launch peanut futures on the Zhengzhou Commodity Exchange on Feb. 1. This follows the recent launch of a pork futures contract on the Dalian Commodity Exchange, and aligns with China’s declared intention of promoting greater transparency in its agricultural markets by creating more agricultural derivatives, among other moves. 

The move comes during a period of sustained high prices for peanuts in China. Peanut prices reached an 8-year high in May last year and currently stand at 10,275 rmb/mt, the highest level since 2016. Peanut oil prices, currently trading at 19,700 rmb/mt, are near all-time highs of summer 2012. 

Peanut imports have increased dramatically in recent years, topping 1 million tones in 2020. That’s an increase of over 500% from 2018 and a new record. Imports come mainly from the US, Senegal, and Sudan. China is the biggest peanut producer in the world, accounting for about 35% of global production. 

About half of China’s peanut supply is directly consumed by humans, and the other half is crushed into meal or oil. Peanut oil consistently trades at a premium to soybean oil, and prices tend to be closely correlated. When soybean oil prices rallied 25% last year, peanut oil prices rose a similar amount. The prices of soybean meal and peanut meal are also closely correlated. Peanut meal is mainly used for aquaculture feed, as well as for poultry feed.  

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