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Peanuts (India): the problems of a large crop

Everyday arrivals in Gujarat have started to touch 200.000-300.000 bags considering the previous year’s trend line, this is not much variation. However the number of factories running this season so far has touches only 50%/70%.

Market participants are confused by several factors:

  • Firstly the GST policy amendments from 5% to 0.10%, it was rather a transfer of exporters to shellers. Although the recent GST changes are only temporary until 31 March 2018, it has taken a toll on stockiest, exporter’s appetite and oil crusher speculations.
  • Secondly the government’s purchase to support MSP (minimum support price) to farmers has brought more confusion to the market. With bumper crop and polls ahead, Gujarat government began groundnut procurement from the 18th The state government starts to procure groundnut at US$ 14 per 20 kg against the prevailing market price of US$ 10. The procurement is done from 106 farmer market centers. The procurement scheme will put an additional financial burden of US$ 78 million on the state exchequer. Since the procurement, prices have jumped to around US$ 12 – 14 for 20 kg bags in select markets.
  • Thirdly the confusion in buyers themselves. With multiple sources serving as a cheap alternative with longer ship time, buyers are very reluctant to consider a clear agenda towards business. Typically October till March is a very peak period of peanut business, however the current situation of local and export demand seem to be a peak among one of the thought.
BOLD 30/40 2017 1190 CIF
BOLD 40/50 2017 1175 CIF
BOLD 50/60 2017 1145 CIF
BOLD 60/70 2017 1130 CIF
BOLD 70/80 2017 1050 CIF
JAVA 40/50 2017 1490 CIF
JAVA 60/70 2017 1335 CIF
JAVA 70/80 2017 1255 CIF


Shippers were trying to catch-up pending shipments due to prolonged Diwaili break. Arrivals were impacted due to festive season. Prices moved up marginally due to crunch in supplies however market went down with a corresponding rise in arrivals. The Bolds (runners) trended down by nearly 5% in the local market and the Java (Spanish) by nearly 8%. With the harvested yields greater than last crop year, we can expect prices to soften more. W.r.t Chinese demand for the bolds, it was in a dormant state. However there were few speculative deals with the Chinese represented Vietnamese purchase for the bolds (runner) at $975 to $1000 per tn.

The local edible oil market corrected downwards after festive time, and so did the other domestic markets. In the short term we could expect the bold (runner) to correct another 5-6% and the Java (Spanish) correct another 3-5%.

The 2016 crop stock is still about 165k tons with the state governments and is currently fetching a measly price for the crushers. Overall, the Indian peanut market is poised to go in for a downward correction in the short-term which may make it more attractive and lend support the momentum.


There is competition at present between Brazil, India, China and Africa. China was impacted by weather issues which gave way a week ago. Prices in China were stable owing to the big crop. Good quality is limited in supply due to drying process affected by rain. If weather supports, the Indians could see a steep fall in the Chinese peanuts market.

Senegal peanut season expected to deliver from Dec. The prices are expected to be same as previous crop. Despite the downtrend in the global market. In the USA, the 2017 peanut harvest is well underway with over 70 percent of the Georgia crop dug and over 50 percent harvest. The greatest exports will pick up, there is little indication that it will be without a drop in price. Even with exports forecast to increase from the last year, the ending stock created by this crop is expected to reach the heights as 2012. The industry needs to find a home for these peanuts as prices will be impacted until this surplus can be moved.

Given the supply situation, prices are keen to correct which can give rise to consumption and expand the peanut economy. Although downward movements of prices are not good for the farmers, it is very healthy for the industry to expand. China cannot go below 1000$/tn, Senegal can price in between $850-$900/tn and India can price same level as Senegal, and with shipment time being an advantage, Indian peanuts, although realizes lower margins, could gain good market share.