Global peanut markets face a complex landscape influenced by varying peanut crops worldwide. India's export of peanuts and peanut oil is currently experiencing a downturn as a consequence of these shifting dynamics.

Peanut production up 15% in China

China and Indonesia's peanut crops are set to be 15 percent larger than last year, while planting season progress in Brazil and Argentina implies an increased harvest in both countries. China's peanut production is predicted to surge by 15 percent, reaching a substantial 170 to 180 million metric tons. However, China's economic struggles have suppressed peanut demand, causing a drop in peanut futures prices. This situation has also impacted groundnut blanch prices, which are now lower by $300 per ton, standing at $1,700 per ton. The ample peanut crop in China has prompted Chinese buyers to offer Indian groundnut oil at a $100 per ton discount.

Oversupply issue in Indonesia

Indonesia, a primary destination for Indian peanut exports, faces an oversupply issue due to its increased peanut production. Consequently, the demand for Indian peanuts in Indonesia has waned, resulting in a global trade imbalance.

53 percent decline in the U.S. exports to China

Meanwhile, in the United States, the peanut market tells a different story. Around 55 percent of the peanut crop has reached the market, with fresh arrivals expected. The European market is sluggish due to economic challenges. Furthermore, the depreciation of the Chinese yuan and the strengthening of the U.S. dollar have affected U.S. peanut exports to China, causing a 53 percent decline. However, U.S. peanut exports to Mexico, Canada, and Britain have surged, offsetting the overall downturn.

Brazil

Brazil's peanut sowing season is underway, with a 10 percent increase expected compared to the previous year. Nevertheless, peanut oil exports from Brazil have fallen by 28.29 percent year-on-year, while peanut grain exports have increased by 7.39 percent for the period of January to September 2023.

Yield declined in India

In India, groundnut production is estimated at 25 to 26 million metric tonnes, with variable outcomes. Sowing of groundnuts in Uttar Pradesh has increased, but grain quality, particularly yield, has declined from 70 percent to 65-67 percent. The peanut market has witnessed heightened demand from Gujarat, leading to a recent price increase. Government support in the form of Minimum Support Price (MSP) purchases will likely prevent a significant price drop, although active stockists could impact prices in January or February.

Amid these shifts in Gujarat's peanut market, estimations raise questions about the accuracy of the expected harvest ranging from 30 to 34 million metric tonnes. The unique rainfall patterns this year challenge the reliability of current assessments, as early rainfall due to Cyclone Biparjoy in June substantially impacted early groundnuts, flooding many fields and causing losses. This led to inaccuracies in government sowing data, inflating groundnut crop estimates. The shifting preference from G-20 to newer peanut varieties complicates the estimation further.