Mundus Agri: Although the prices for peanuts have fluctuated in a narrow range in India in recent weeks, traders reckon this is about to change. Issues are global factors, especially since production is under the weather in Brazil. Recently updated production estimates, however, tell a different story.
Traders express unease
Traders are expressing unease at the current market situation in India. Although the market has been spared another hike in prices in the last three weeks, the overall trend is alarming. Prices have steadily risen in India in recent years, and fear is that worse is in store as the situation is far from encouraging in the international market. Peanut consumption ranges so high in India that it has to rely on imports, despite being a leading producer. Shipping costs have surged since Covid took hold and container availability by no means matches demand.
India’s importers are mainly concerned over conditions in Brazil, where dry conditions have reduced yields, and aflatoxin contamination has limited exports this year. Prospects are also not precisely encouraging in the USA. The problem is that the farmers did not obtain the profits they had anticipated, which has impacted sowing and cut production. Inflation has also hit the market in Argentina and spoiled exports here as operational costs are too high. The shocking stagnancy in demand in Europe is also highly discouraging as inflation is expected to reduce consumer spending on non-essential goods. These shifts in supply and demand will add to the high degree of uncertainty, which is already giving traders headaches.
Global production to range higher.
Prospects are, however, less bleak in terms of production. In the recently updated peanut production estimates for 2022/2023, the USDA’s Foreign Agricultural Service (FAS) even anticipates a nominal 1.2% rise in global production. While China is expected to maintain its position as a leading producer, India, Nigeria and Sudan, and Burma will also step up production. This will compensate for declines in other countries like the USA and Argentina. Guinea will witness the sharpest decline in production. The estimates for Brazil are highly optimistic as production is expected to rise from 718,000 mt in 2021/2022 to 750,000 mt in 2022/2023.