Coronavirus epidemic: Groundnut exports to China come to standstill

After two months of meteoric rise, groundnut import orders from China have come to a standstill due to the coronavirus outbreak there.

Data compiled by the Agricultural & Processed Food Products Export Development Authority (Apeda) showed India’s groundnut exports jumped by a staggering 27 per cent to 454,373 tonnes for the period between April and December 2019 as compared to 357,795 tonnes in the corresponding period last year. In value terms, however, the growth was phenomenal 41.64 per cent at $489 million versus $346 million.
 

Most of this growth was achieved in the last two months of the period between November and December 2019 due to short supply in China following the country’s trade war with the United States which levied a massive 25 per cent import duty and absence of other supplying country in the world.

Between April and October, we had exported less than 200,000 tonnes of groundnut. Sudden upsurge in demand enabled us to export around 250,000 tonnes of groundnut to China and rest of the world primarily to the Far East countries due to reduced supply from United States and other countries like Senegal. Again, orders have disappeared from China due to lockdown on coronavirus spread. We expect a massive slowdown in groundnut exports between January – March quarter,” said Sanjay Shah, one of India’s largest exporters.

In a major boost for farmers, groundnut prices remained elevated despite a slowdown in exports. Groundnut prices recovered fast after falling to Rs 57 a kg in early February from its level of Rs 59 a kg in January, to trade currently at Rs 60 a kg, recording thereby 5.3 per cent jump in the last one month.

Traders attribute the price upsurge to unavailability of stock with farmers and stockists. Cumulative daily arrivals have declined by 30-40 per cent in the last few weeks.

“New orders from China are not coming in now. Orders from Vietnam have also dried up. But the decline in orders is offset largely with reduced supply, supporting thereby groundnut prices to remain firm. India has already surpassed the quantity of groundnut export of last year. 

We expect another 150,000 tonnes of groundnut to be exported to take India’s overall annual shipment to 600,000 tonnes this year,” said Khushwant Jain, Chairman, Indian Oilseeds and Proudce Export Promotion Council (IOPEPC).

To take advantage of high prices, however, National Agricultural Cooperative Marketing Federation of India (Nafed) has started liquidating stocks.

To taste the market pulse, Nafed has come out with a small quantity tender to sell its groundnut which the Federation had procured in 2018. However, traders say the quality of nuts sold by the federation is sub-standard for export but can be used for oil extraction and direct consumption.

An email sent to Nafed did not elicit any response. Traders, however, believe that Nafed may wait for further rise in groundnut prices to liquidate its current year’s stock. As of February 25, Nafed has procured 718,019.35 tonnes of groundnut worth Rs 3655 crore for the current season at the minimum support price (MSP) of Rs 5090 a quintal.