Indian Peanuts: Sharp Crop Loss Meets Surprisingly Soft FOB Prices

India’s 2026 peanut crop is heading for a notably tighter balance sheet, with national output projected about one quarter below last year while export prices so far show only modest strength. The key risk for the coming months is that tightening raw groundnut and G20 quality supplies collide with stronger domestic demand once new-season arrivals peak. India’s groundnut production is estimated at just 6.5–6.8 million tonnes in the current season, down sharply from 8.2–8.4 million tonnes previously. Losses are concentrated in Gujarat and Rajasthan, while Madhya Pradesh and Uttar Pradesh partly offset the decline but cannot restore last year’s volume. Despite this, current Indian FOB quotations for bold and Java kernels are only slightly firmer than in early September, suggesting that export demand remains cautious and that the tighter crop has not yet been fully priced in.

Prices

Export quotations show only moderate firmness despite the 25% production loss. Latest indications (26 September 2026) for India, FOB New Delhi, are:

The slight week‑on‑week easing suggests that export buyers are still resisting higher offers, helped by alternative origins such as Brazil and ongoing, if uneven, arrivals into Indian domestic markets.

Supply & Demand

National groundnut output is projected at 6.5–6.8 million tonnes versus 8.2–8.4 million tonnes last season, a drop of roughly 25%. Gujarat, traditionally the backbone of India’s groundnut exports, is expected to harvest only 2.8–3.0 million tonnes, down from about 4.3 million tonnes, while Rajasthan falls from approximately 1.8 million to 1.3 million tonnes.

These two states account for the bulk of the decline and are unlikely to be fully offset by gains elsewhere. Madhya Pradesh and Uttar Pradesh together may reach 1.5–1.7 million tonnes, up from around 1.0 million tonnes last year, but their increased contribution still leaves the national balance sheet clearly tighter than in 2025.

Other producing regions add moderate volumes but cannot change the overall picture. Telangana and Andhra Pradesh together are seen at about 450,000 tonnes, Karnataka at 200,000 tonnes, and Tamil Nadu at 500,000–600,000 tonnes, underpinning regional supply but not compensating for losses in Gujarat and Rajasthan.

On the demand side, domestic interest for kernels and crushing remains firm, especially from southern states, even as international demand is described as cautious with some importers still well covered. In addition, Sudan’s sharply reduced exports due to conflict and weather-related quality issues in Argentina are limiting alternative origins for some buyers, gradually enhancing India’s strategic importance in global trade flows.

Fundamentals & G20 Quality

The overall crop assessment points to tighter availability of G20 groundnuts, a key processing variety. The primary driver is the smaller crop in Gujarat, which traditionally supplies a substantial share of exportable G20 material. Lower volumes from Rajasthan further restrict the pool of good-quality bold and G20 kernels available to exporters.

With national production down by about a quarter, size distribution and quality become more important than headline tonnage. Any adverse weather during the late pod-filling and drying stages in Gujarat and Rajasthan would disproportionately affect G20 quality, tightening premiums for well‑sized, low‑aflatoxin lots. By contrast, increased production in Madhya Pradesh and Uttar Pradesh is more oriented toward domestic uses and cannot fully replace Gujarat’s export-grade G20 supply.

Official data indicate that India’s groundnut sector entered this season from a relatively high‑production baseline in 2025–26, around 13 million tonnes on a broader oilseed definition, which amplifies the statistical impact of the current 6.5–6.8 million‑tonne estimate. This swing reinforces the perception of a structurally tighter balance sheet for 2026/27, particularly for export-quality kernels.

Weather & Near-Term Risks

Groundnut harvesting in Gujarat and Rajasthan is progressing under generally seasonally normal late‑monsoon conditions, but localized heavy showers remain a risk in parts of Saurashtra and north-west India. Late rains during lifting and drying could hurt kernel quality, especially in already-stressed fields, and further reduce marketable G20 volumes.

Short-term mandi data in Gujarat, Rajasthan and Uttar Pradesh show relatively firm to slightly rising wholesale prices compared with earlier in September, reflecting traders’ awareness of smaller supplies even before the full harvest reaches market yards. If rainfall stays contained during October, volume losses may stabilize, but any renewed wet spell would likely push domestic prices higher and quickly filter into FOB offers.

Trading Outlook

• Importers / roasters: Use current soft FOB levels in India (especially bold 50–70) to extend cover into Q1 2027, prioritizing higher‑grade G20 and Java where quality risks are most acute.
• Crushers in India: Hedge downside in oil and meal by gradually locking in raw groundnut at current mandi levels, but avoid over‑committing before full harvest clarity in Gujarat and Rajasthan.
• Exporters: Maintain disciplined offer levels for top‑quality G20 and large bolds; consider selective forward sales rather than aggressive volume commitments until post-harvest quality is fully assessed.
• Buyers relying on Sudan/Argentina: Diversify origin mix toward India and Brazil, given Sudan’s export disruptions and Argentina’s weather‑related quality issues, which could tighten global premium segments.

3‑Day Price Direction Snapshot

• India FOB New Delhi (bold & Java kernels): Sideways to slightly firmer over the next 3 days as exporters test higher offers but face still‑cautious overseas demand.
• Gujarat domestic mandis (in-shell/bold): Mild upward bias driven by harvest‑time supply caution and quality concerns, especially if local showers persist.
• Brazil FOB raw peanuts: Stable to marginally softer, as Brazilian offers remain competitive and partly cap India’s ability to lift USD-denominated prices in the very short term.