Damage from Hurricane Ivan that struck the US last week could send prices for peanuts, a common confectionery ingredient, rising as reports suggest that virtually all of the nation's 2004 peanut crop could be at risk.
Dow Jones Newswires reported that an estimated $5 billion (€4.06bn) worth of US grain and oilseeds was in fields awaiting harvest when the hurricane made its landfall.
Since global demand for peanuts is slightly more than supply, peanut prices are vulnerable to risks, notably those caused by adverse weather conditions. But despite this, peanut ingredients remain a viable alternative for bakery and confectionery manufacturers who might otherwise have to turn to higher priced hazelnuts and almonds.
European ingredients firms source their peanuts from the key producing countries - mostly from the US, then China, Argentina and South Africa.
"It is hard to say the impact the hurricane will have on prices," a spokesperson for nut firm IMKO Ingredients said to FoodNavigator.com.
The firm, expecting deliveries from the US August harvest in late October or early November, commented that before the hurricane US prices were a "little bit more expensive" for Europe after the introduction of the 2002 US Farm Bill that led to an 8 per cent rise in domestic demand last year and a 6 per cent rise this year.
A squeeze on demand in the US will push peanut buyers, such as IMKO, to look for alternative sources, notably in China. "Plantings were up in China this year, but it is too early to know about the crop, we have to wait until the end of December," said IMKO.
The industry will have to wait to find out specific figures on the damage Hurricane Ivan has had on the US crop. The US Department of Agriculture informed FoodNavigator.com that "at the current time we have no new data, our first look will be on 12 October," when the Washington-based National Agricultural Statistics Service , part of the agriculture department, releases its report.
On 10 September, NASS had predicted a large crop for 2004, with peanut production at 2.01 million metric tonnes, nearly a 7 per cent rise on 2003 when the crop reached 1.88 million metric tonnes.