Groundnut prices to remain stable

An increase in the acreage of groundnut in Gujarat might bring down prices of the commodity as the harvest season nears. However, the prices would fluctuate only after two months, post-liquidation (clearance of old stock).

Farmers, following last year's groundnut shortage and coupled with a good spell of rains this year, have sown more of the crop, expecting good prices in the market.

According to the government figures, this year the groundnut crop has covered almost 16 lakh hectares till date. However, the traders believe that the acreage might exceed 17 lakh hectares this year. Last year, groundnut acreage had fallen by almost two lakh hectares. During 2005-06, the total area under cultivation stood at 16 lakh hectares compared with 18 lakh hectares the year before. The average acreage (Rabi-Kharif) remains 19 lakh acres in Gujarat.

At present, the price of groundnut in Gujarat is Rs 11,000-12,000 for 400 kg. For crush, the prices remain between Rs 11,500 to 12,000 for 400 kg. Prices had peaked following the decreased acreage and production.

In the last two years, groundnut production has decreased by two lakh tonnes.

Gujarat produced 19.5 lakh tonnes of groundnut during 2005-06 (Rabi and Kharif), while during 2006-07 the production stood at 17.5 lakh tonnes.

Bipin Patel, a Junagadh-based oil miller and a groundnut trader, said, "The prices are likely to remain the same for the next two months."

Patel added that at present traders and millers are depending on old stock but, after two months the market will reach liquidation. New stock will arrive in the market after one and a half months.

About the reason for good acreage compared with the last year, Patel said the second spell of rains, which began two days ago is also good for the crop.

"The market may take a dip as soon as the harvest season nears. We expect the prices to go down considerably. We have not seen such a surge in groundnut prices for many years, Rs 11,000 to Rs 12,000 is a record high in the state," said another Junagadh-based trader on terms of anonymity.

Groundnut oil prices reached an all-time high of Rs 802 per 10 kg this year, but timely imports of palm oil by the state government brought prices down to Rs 750 per 10 kg. The state government decided to import 18,000 tonnes of palm oil, of which 16,000 tonnes have been imported till date.