Peanut Market Hit Rock Bottom as Demand Dries Up

Peanut seed prices have plummeted in India, reaching their lowest levels this season. Demand for peanut-based products remains muted, while the influx of peanuts into the market has slowed slightly. A portion of farmers, selling peanuts to meet personal financial needs, has further pressured the market.

The bumper peanut crop in Madhya Pradesh and Uttar Pradesh, estimated at 1.5 million tonnes, has added to Gujarat’s market woes. Traders in Uttar Pradesh have been offloading peanuts at any price, while stockists holding last year’s inventory are also selling at steep discounts, unable to clear their stocks from warehouses.

Falling Prices and Global Disparities in Peanut Rates

In Uttar Pradesh, peanut grain prices have dropped to 80–90 counts, with the current market price hovering around $0,84 per kg. Years ago, $0,84 per kg was the price of lower-grade Kapchi peanuts, but this is now the rate for grain, reflecting the severity of the price drop.

Globally, Sudan’s peanut grain prices stand at $0,98 per kg, compared to $0,87 per kg in India. Typically, Indian peanut prices are $0,10 per kg higher than Sudanese rates, but this year they are $0,10 per kg lower due to surplus production. Shipments from Sudan remain uncertain amidst the country’s internal conflict.

Gujarat’s Surplus Crop Raises Red Flags

Gujarat is grappling with an unprecedented peanut production surplus. Local industry estimates place production at 3.8–4 million tonnes, but government figures suggest it could reach as high as 5.8 million tonnes. This wide gap in estimates reflects the challenges of gauging supply accurately.

Export volumes, typically 700,000–800,000 tonnes, may rise to 1 million tonnes if low prices persist. However, disposing of such a large crop remains difficult, especially as yields have surged. In regions where farmers previously harvested 10 maunds, output has climbed to 15–20 maunds this year.

Weak Global Demand Puts Pressure on Exporters

The global peanut market offers little relief. Key destinations like China and Vietnam show limited interest, with China’s market facing sharper declines than India’s. Peanut oil prices have fallen to $1,50 per kg, but even at this reduced rate, global demand remains subdued.

For Indian exporters, competition from cheaper global suppliers, combined with a lack of significant demand, complicates efforts to clear surplus stock.

Conclusion: Farmers Might Have to Struggle

India’s peanut market faces a perfect storm of bumper crops, weak domestic demand, and shrinking global opportunities. While lower prices may encourage some increase in export volumes, the sheer size of the surplus presents significant challenges. Without renewed interest from key global buyers like China or Vietnam, peanut prices are unlikely to see a meaningful recovery in the short term.





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