Groundnut Market- Size Analysis and Future Trends

The groundnut market is a crucial component of India's agriculture sector, with significant influence on both domestic consumption and exports. As a key oilseed, groundnut production has a considerable impact on edible oil supply, livestock feed, and related industries. In this blog, we will explore the size of the groundnut market, price trends, and future prospects.

Overview of the Groundnut Market in India

India is the second largest producer and consumer of groundnuts in the world. Groundnuts, or peanuts, are grown primarily in Gujarat, Andhra Pradesh, Tamil Nadu, Karnataka, and Maharashtra. The groundnut market is highly seasonal and dependent on the monsoon, making price trends and supply volatile.

Let's explore groundnut production, market size, and price trends in India.

1. Production and Cultivation

Groundnuts are cultivated across India, covering millions of hectares of farmland. The major varieties of groundnuts grown in India include Spanish and Virginia. Due to their high nutritional value, groundnuts are used in multiple forms—raw, roasted, or as oil.

2. Groundnut Market Size

The groundnut market size in India has been expanding due to increased demand in food processing industries, edible oils, and animal feed. In FY
2023, India's groundnut production volume reached 10.3 million metric tons. This growth is further driven by the rising demand for healthier alternatives to refined oils, leading to increased use of groundnut oil. The expected groundnut production volume for FY 2024 is 10.18 million metric tons, further contributing to the market's expansion.

3. Groundnut Price Trends

India's groundnut price trends fluctuate depending on factors such as weather conditions, global market dynamics, and government interventions. Good monsoons usually lead to increased yields, resulting in a dip in prices. However, factors like export demand and oilseed shortages can lead to upward price trends in the commodity market.

Source: https://www.indexmundi.com/commodities/?commodity=peanuts&months=60&currency=inr

Factors Influencing the Groundnut Price in India

Weather Conditions and Monsoon Dependence

The Indian groundnut market is heavily reliant on monsoons for irrigation. Good rainfall can lead to higher production, while inadequate rainfall leads to reduced supply and increased prices. Thus, weather plays a crucial role in setting groundnut price trends.

Government Policies and Support

The Minimum Support Price (MSP), which is offered by the Indian government, helps to guarantee that farmers receive a fair price for their produce. Additionally, government procurement can stabilize groundnut price trends during bumper harvests to prevent prices from plummeting. For the year 2023-24, the MSP for groundnut was recommended at ₹6,377 per quintal, and the same was fixed at ₹6,377 per quintal. For the year 2024-25, the MSP for groundnut has been recommended at ₹6,783 per quintal, and it has been fixed at ₹6,783 per quintal. Subsidies and export incentives also play a part in influencing the overall market dynamics.
Source

Commodity Market Trends

The commodity market has a significant impact on groundnut price trends. When there is an increase in demand for oilseeds globally, it tends to boost the prices of groundnuts in India. The fluctuation in other edible oil prices, such as sunflower or soybean oil, also influences the demand and pricing of groundnut oil.

Export Demand

India is a major exporter of groundnuts. Export demand affects the groundnut market, especially in international markets such as Southeast Asia, Europe, and the Middle East. Any shift in global market trends—such as import restrictions or tariffs—directly affects the groundnut price trends in the Indian commodity market. As per trade sources, cumulative groundnut exports from October 2023 to March 2024 totaled 4.29 lakh tonnes showed a decrease of 9% as compared to 4.73 lakh tonnes during the same period last year.

Future Trends of Groundnut in the Indian Market

The groundnut market in India is experiencing significant growth driven by several key trends.

1.    Increasing Demand for Edible Oils

Groundnut oil is becoming popular due to its healthy fats and antioxidants. With India’s edible oil market growing at a CAGR of 8-10%, demand for groundnut oil is increasing as consumers switch to healthier alternatives. Rising awareness, urbanization, and the need for heart-friendly oils further drive this trend.

2.    Growth of Organic Groundnuts

Organic groundnuts are gaining traction with consumers willing to pay 20-30% more for organic products. Farmers benefit from premium pricing, aligning with government efforts to promote sustainable agriculture. The growing preference for organic snacks and oils supports this market’s expansion.

3.    Use in the Processed Food Industry

The processed food industry is driving demand for groundnuts through products like peanut butter, snack bars, and confectioneries. With peanut butter demand growing, groundnuts are becoming essential in food portfolios, boosting domestic and export markets.

4.    Technological Advancements

Farming technologies like precision agriculture and improved seed varieties are boosting groundnut yields and stabilizing supply. The adoption of drones and mechanized harvesting lowers wastage and costs, leading to better profits and consistent price trends.

5.    Rise in Export Opportunities

India’s groundnut exports benefit from improved infrastructure and policies under the Agricultural Export Policy 2018. With increasing global demand for organic and premium groundnuts, India’s exports are expected to grow, supporting stable price trends.

6.    Enhanced Livestock Feed Market

Groundnut cake, a by-product of oil extraction, is in high demand from the dairy and poultry industries. With dairy growing, the demand for nutritious livestock feed is increasing, and the groundnut feed market is expanding and supporting farmers.

Check real-time prices of groundnut cake here- https://pricevision.ai/commodities/new/groundnut_cake?market=spot_mandi_rajkot

7.    Expansion of Contract Farming

Contract farming provides farmers with stable pricing and technical support, reducing risks and market volatility. This model ensures a consistent supply of quality groundnuts, supporting domestic consumption and exports while stabilizing prices.

PriceVision: Predicting Groundnut Cake and Groundnut Oil Prices

PriceVision is a powerful tool that uses machine learning to predict price trends for various commodities, including groundnut cake and groundnut oil. Accurate price predictions help farmers, traders, and producers in both the animal feed and edible oil industries make informed decisions. PriceVision analyzes market data and trends to provide reliable forecasts, aiding stakeholders in mitigating risks related to price fluctuations.

With the increased use of groundnut cake in the livestock industry and the growing demand for groundnut oil as a healthier alternative, PriceVision offers a valuable service. Whether you're a farmer, oil producer, or feed manufacturer, leveraging PriceVision’s real-time market data can lead to better profitability by optimizing the buying and selling process of both groundnut cake and groundnut oil.

Check real-time prices of groundnut oil here- https://pricevision.ai/commodities/new/groundnut_oil?market=spot_mandi_rajkot

Conclusion

The Indian groundnut market is a vital part of the country's agriculture sector, influencing both domestic consumption and exports. The market is shaped by various factors such as weather conditions, government policies, global commodity trends, and export demand. As the demand for edible oils, organic groundnuts, and livestock feed grows, the future looks promising.

However, challenges like price volatility, climatic risks, and quality issues remain. With the help of tools like PriceVision, stakeholders can make informed decisions to navigate the complexities of the market and improve profitability.

FAQs

1. What is the current price trend for groundnuts in India?
The current price trend for groundnuts in India varies depending on the region and seasonal factors. Prices generally fluctuate based on supply, demand, and market conditions.

2. Which state is the largest producer of groundnut in India?
Gujarat is the largest producer of groundnut in India, contributing a significant portion to the overall national production due to its favorable climate and soil conditions.

3. What are the main uses of groundnut?
Groundnut is mainly used for extracting edible oil, as a snack (roasted or boiled), and as livestock feed in the form of groundnut cake.