Jaipur (Commoditiescontrol) - Groundnuts production is expected to increase this year as compared to previous crop year due to significant expansion in sowing area reported across the country. Above all, the crop prospect remains robust. However, expectation of fall in groundnut shipment to China and Vietnam has fanned fears among the traders that the commodity may trade close to its Minimum Support Prices (MSP). If circumstances remain the same as seen in 2013-14 when the government remained aloof from groundnuts procurement, it will be the worst situation for the groundnuts crop and the farmers as well.
However, positive thing is that bumper supply of groundnuts will make way for idle crushing mills to restart operations and give some respite to millers. At the same time, consumers will lure into buying cheaper groundnuts oil if prices fall further.
Groundnuts sowing areas has expanded in Gujarat, Rajasthan and Maharashtra during the ongoing kharif season while the acreage of the same crop has shrunk in Andhra Pradesh and Telangana due to deficient rain. As on August 10, sowing covered 12.85 lakh hectares against 12.1 lakh hectares last year during the same period in Gujarat, the largest groundnuts growing state in the country. However, the normal acreage of groundnuts crop in whole kharif season remain around 14 lakh hectares in the state.
Similarly, groundnut sowing in Rajasthan recorded at 4.55 hectares as of August 10, 2015 while the same crop had covered 4.08 lakh hectares during the corresponding period a year ago. Generally, five lakh hectares of land remains under groundnut cultivation.
In Maharashtra, groundnut farming, normally, records around three lakh hectares in the whole season. As on August 13, 2015, groundnuts acreage was at 1.74 lakh hectares in the state while it was at 1.45 hectares in the corresponding period a year ago.
As on August 12, 2015, groundnut sowing reduced to 4.24 lakh hectares from 6.61 lakh hectares in the same period last year in Andhra Pradesh, while normally, the acreage of groundnuts remains above 10.56 lakh hectares in the state during this season. Similarly, in Telangana groundnuts sowing area shrank to 5,216 hectares as of August 12, 2015 from 7,800 hectares in the corresponding period last year. However, the normal acreage of the season is at 20,710 hectares in the state.
As per Central Organisation for Oil Industry and Trade (COOIT), Groundnuts production slashed 24.28% to 35.7 lakh tonnes in year 2014-15 from 47.1 lakh tonnes in 2-13-14. At the same time sowing area also shrank near 13.77 per cent to 37 lakh hectares from 43.2 lakh hectares during the above mentioned fiscal years. Farmers had to shift from groundnuts to other crops as they failed to realise remunerative prices as the government agencies showed little interest in procure groundnut in 2013-14 despite huge production.
In 2014-15, groundnuts production reduced to 14.4 lakh tonnes from 25 lakh tonnes a year ago in 2013-14. Groundnuts produce held at 6.50 lakh tonnes in Rajasthan while it was 5.20 lakh tonnes in 2013-14.In Andhra Pradesh and Telangana 3.80 lakh tonnes of groundnuts was produced in 2014-15 while it was slashed from 3.50 lakh tonnes to 3.10 lakh tonnes in Karnataka. Output was around two lakh tonnes in Madhya Pradesh, Chhatisgarh and Tamilnadu.
Jignesh Kumbhani, Krishna Agri Commodities, Rajkot said, “The state received good rainfall and the health of crop is in good condition presently, however, it will need rain in next few days, otherwise growth will be affected.”
Present condition of the crop shows the production will increase around 10 per cent, clear pictures will appear by mid-September, he added. Traders predicted around 18-20 lakh tonnes of groundnuts in Gujarat last year while the government estimated at 18-20 lakh tonnes. Unfavorable weather adversely affected groundnuts crop last year but it was ignored by the government while estimating groundnuts output.
“Market can’t ignore speculation that Chinese purchase of groundnuts will fall this year as the country is facing with economic adversaries. However, it will come to know only in December that China will buy groundnuts from India or not", according to Kumbhani.
Meanwhile, it is expected that Vietnam will remove curb on groundnuts import from India. Though, China and Vietnam are our key buyers in the overseas market and activities in the coming season will matter a lot. The crop will be good in demand in local market also as the supply pipeline is empty in the domestic territory, Kubhani said. According to him, “If new groundnut crop output remains good, its prices will fall nearly 20 per cent."
Groundnuts crop is in better condition in Rajasthan and if it continues to be the same, then the commodity, which is sold at Rs. 4,100--4,500/100kg presently, will fall near Rs. 3,500/100kg, said Prakash Nawalakha, Amrit Udyog, Bikaner. The crop of groundnuts is also in good condition in other states and the government may have to procure it there is a bumper production this year, otherwise groundnut prices will be fall below its MSP, he added. Even prices of groundnut oil are expected to decline if production increases, he further added. According to him, groundnuts, which was trading near Rs. 94/kg, has come down to Rs. 86/kg and may fall to Rs. 81/kg in near future.”
Groundnut oil demand is very slow, presently, that is the reason mills are not using their full capacity but with fall in its prices (around Rs.70-75/kg) demand for groundnuts oil will climb in near term, said Nawalkha.
New groundnut crops will take two months to harvest and everything depends on monsoon as the crop needs rainfall shortly, said Vikram Duvani, MD, Rachana Seeds Industries. In coming harvesting season, groundnuts will be good in demand in the domestic market but exports demand will depend on China as present economic condition of China is not good which suggests that Chinese demand for the commodity will weaken, he added.
According to him, “If circumstances remain favorable, new crop may trade near Rs. 3,500-4,000/100kg, though groundnut is offered at Rs. 5,000/100kg presently, but it may hold at Rs. 4,000/100kg if government initiate procurement.Stocks would be nil till the new crop arrivals begin, said Duvani".
As per the Agriculture and Processed Food Products Development Authority (APEDA), groundnuts exports recorded at 7,08,386 tonnes in the fiscal year 2014-15 while the overseas sale was 5,09,751 tonnes a year before in 2013-14. Hence, exports of groundnuts rose more than 39 per cent. India sold 5,35,637 tonnes groundnuts in overseas market during the fiscal year 2012-13.
It should be noted that groundnut production was very low in the last kharif season while the demand for the Indian crop has been better in the global market in recent past. Though, groundnuts prices could not sustain upward movement in the domestic market but the Indian commodity remained competitive in the overseas market. As per the traders, the average prices of groundnuts were at $ 1,000-1,100/tonne in the International market during November 2014-March 2015 while its prices were at Rs. 850-1,050 for 20 kilograms in the domestic market.
Presently, groundnuts is trading near $ 1,100/tonne in the global market while the commodity is at Rs. 1,000-1,020/20kg in the domestic market.
India sells two qualities (Java and Bold) of groundnuts in the overseas market and normally, Java quality remains in bulk in the global market but Chines demand for bold quality was seen better last year.
Besides China, India exports groundnuts to Vietnam, Malaysia, Philippines and Thailand.
(By Commoditiescontrol Bureau; +91-22-40015533)
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