India: Peanut Market Between Steady And Firm For 2021

Peanut prices in 2021 were recorded to be better and more stable than in 2020. There were some drastic dips in the prices during the year, but the overall sentiment was stable. Several factors led to the market having lows and highs of the price of the Groundnut in the spot market.

Overall Scenario Of Groundnut For The Year

• The months of January, July, and December witnessed a mixed trend in the spot market prices for the groundnut varieties.
• There was not much movement in the market for Groundnut in Feb, March, May, and September.
• The market was appreciative of the nuts in June, August, and November
• April and October recorded a downward trend for the Groundnut spot market.

Factors that Influenced The Groundnut Market 

• Before festivals, the local demand for peanuts increased.
• The increase in the freight price and inflating edible oil prices also contributed to the steady nature of the nuts market.
• According to analysts, the groundnut price remained stable and had a northbound trend due to the greater demand for the product from China and other international buyers.
• It was expected that China would import a significant amount of Groundnut from India during the new season from October.
• However, in October, China did not place any demand for peanuts from India. Traders hoped that the export demand for the crop increasing from China would make the prices for the nut go high.
• However, the Chinese market for peanuts remains unstable. With the stock levels still high in the oil and peanut kernel market, the overall small package sale is not faring well either in the country. Moreover, with high purchases during the last season and expected carryover stock, the idea about when China will start purchasing new stock is unknown.
• There has been a significant rise in the demand for groundnut oil in the domestic market, which increased by 25% compared to last year. India also experienced five times more export of groundnut oil the previous year, which was about 225 thousand tonnes.

Current Situation 

• Currently, groundnut oil is considered a premium edible oil in the market.
• Indian Oilseeds And Produce Export Promotion Council under the Ministry of Commerce Government of India reported India is one of the top five players in the Groundnut market globally. After China, India is the largest producer of the crop.
• India ranks first in the acreage of the crop, while second in production and fifth in yield.
• Of the total oilseed export from India, Groundnut had a share of 59.43 percent for 2020-2021, though it decreased from the quantity it exported in 2019-20, which was 664.44 tons compared to 638.58 tons for 2020-21.
• It is also important to note that cottonseed oil is expensive than groundnut oil, and the farmers have increased the sowing acreage of the former by 99 percent compared to the last three years’ average.
• Though Senegal and Sudan are the main competitors to India in groundnut export, farmers feel comfortable because the former two countries’ crops won’t be available till December-January. As a result, India has the market open from October to December to export their product.
• With the rise in the export demand from China last year for Groundnut, the Gujarat farmers invested in large-scale crop cultivation. On average, the groundnut production area is 160 thousand hectares which have now increased to 200 thousand hectares. Furthermore, it has been reported that 40% of 330 thousand tons of Groundnut produced by Gujarat was exported.
• The increased domestic and export demand for Groundnut and its oil resulted in the farmers not selling the products at Minimum Selling Price (MSP). This was the first time groundnut farmers had this positive experience in the last four years.
• The Joint Secretary (Oilseeds) of the Department of Agriculture and Cooperation, under the Union Ministry of Agriculture, Shubha Thakur, reported that the Union Government has this ambitious project of increasing the production of Groundnut between 2025 and 2026. The increase will be from 10.12 MT to 14.15 MT. Shubha Thakur announced a webinar on ‘Wondernut-Groundnut.’
• MSP must be granted to Groundnut as the prices for the crop have started dropping.

Prediction 

The price may remain bullish in the coming months because of the lower sowing acreage of Groundnut in the Kharif season. As per Gujarat’s Director of Agriculture (DAG), farmers have sown 1.901 million hector groundnut this year, which is 8 percent less than last year. Though this year’s sowing is above average, lesser than the previous year, which was 2.05 million hectares, it is 12.15 percent higher than the last three years’ average.

The farmers are keener to plant crops that give better prices, like soybean fennel and other crops compared to Groundnut.

Heavy rain from the second half of August to early October worked as an advantage for the farmers and changed the season to normal. Despite the heavy rain, there was no news of crop damage, and instead, the yield has increased.

It has been reported the crop yield for Groundnut has increased from 1715 kg per hectare the last year to 2020 kg per hectare this year. With the increased production in place, the Gujarat Government planned to buy the nut in the shell at $74.12 per quintal, the minimum support price (MSP). 

The excess production of the crop from Gujarat can cap the price in the coming day.

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