Double trouble for Groundnut Market in Gujarat

Unseasonal rainfall in Gujarat, a major groundnut-producing region, is poised to significantly impact production. However, the anticipated low production may not offer respite to farmers or traders as China, a key buyer of Indian peanuts, leans towards Brazilian peanuts over Indian produce this season. Adding to the complexity, market forecasts predict stability in groundnut oil prices with minimal chances of a decline this year.

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Rajkot : The groundnut market is bracing for a compounded challenge this season in Gujarat, grappling with adverse domestic conditions and shifting international preferences.

Unseasonal rainfall in Gujarat, a major groundnut-producing region, is poised to significantly impact production. However, the anticipated low production may not offer respite to farmers or traders as China, a key buyer of Indian peanuts, leans towards Brazilian peanuts over Indian produce this season. Adding to the complexity, market forecasts predict stability in groundnut oil prices with minimal chances of a decline this year.

Kishorbhai Viradiya, President of the Saurashtra Oil Mills Association (SOMA), highlighted the market dynamics, indicating a strong demand for G-20 category peanuts both in domestic and export markets. The untimely rains in late November have inflicted damage of around 15 to 20 percent on G-20 crop yields in Gujarat, leading to a drop in production of this specific variety.

Despite the potential for a surge in prices of G-20 peanuts due to reduced production, Viradiya expressed skepticism, citing China’s preference for Brazilian peanuts this season. Last year, China purchased Indian peanuts at $2300 per tonne, yet this season, they seem disinclined even at $1830 per tonne. Despite exporters quoting $1760 per tonne, the absence of orders from China adds to the challenge.

In the financial year 2022-23, India exported peanuts worth 1.12 billion rupees to China, constituting 14% of the country’s total exports. According to reports from APEDA, India’s total peanut exports for the fiscal year 2023 stood at 6.68 lakh tonnes, marking a 30% increase compared to the previous year’s exports of 5.14 lakh tonnes.

While peanut production faces a setback, the dull export scenario undermines potential gains in the domestic market. Despite expectations for increased supply to crushing mills and subsequent groundnut oil production, SOMA observes a lack of likelihood for reduced groundnut oil prices. This observation stems from the burgeoning peanut table market, exemplified by Bharuch-based players requiring 90 tonnes daily in the salted groundnut market, and a major domestic namkeen market player expanding production, soon requiring 500 metric tonnes daily.

With the country’s annual peanut production hovering around 110 to 115 lakh tonnes and its direct or table consumption at approximately 7 million tonnes, the intricate dynamics of supply, shifting international demands, and domestic consumption present a complex challenge for stakeholders in the groundnut industry.

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