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Farmers in the Kurnool and Nandyal districts have significantly reduced peanut cultivation due to inconsistent rainfall and falling market prices. Once covering nearly 100,000 hectares (ha), peanut farming has decreased to 45,000 ha. Poor rainfall in Jul-24 severely damaged crops, resulting in low yields and high input costs ranging from USD 354.23 to 413.27 per acre (INR 30,000 to 35,000/acre). Farmers have reported losses of USD 59.04 to 70.85 per acre (INR 5,000 to 6,000/acre) due to poor yields and lower market prices, which have fallen from USD 82.65 per quintal (INR 7,000/quintal) to USD 64.94/quintal (INR 5,500/quintal). As a result, many farmers are shifting to more profitable crops, leading to a decline in peanut production in the region.
On November 21, the President of the Republic of The Gambia visited peanut farms in Sinchu Baya, Sami District, to assess reports of poor peanut yields. The farm owners attributed the low yield and quality to a month-long drought. After inspecting farms, the President acknowledged the significant impact of the drought on peanut production, stressing that this would affect farmers' income. He emphasized the need for immediate and long-term measures to support farmers, including diversifying into resilient crops such as cashews and potentially reviving cotton farming. The President also highlighted the importance of climate change adaptation in agricultural policies.
As of November 24, the United States (US) peanut harvest reached 93% of the predicted area, slightly behind the 2023 pace and the five-year average by 2% points. Oklahoma made significant progress, with a 10% point increase in the last week. The peanut harvest is nearly complete in seven of the eight states; the main producing states are Georgia, Alabama, Florida, Mississippi, Texas, North Carolina, Oklahoma, and Arkansas. The progress is attributed to favorable conditions for the crop, although it has been slightly slower than other crops, such as cotton and sunflower, which have performed strongly.
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India's peanut prices remained stable at USD 0.66 per kilogram (kg) in W48 but declined 19.51% year-on-year (YoY) from USD 0.82/kg in 2023. This drop reflects a challenging market environment, likely influenced by lower domestic production and increased input costs. However, rising demand from Indonesia has provided some market support. Exporters have reduced prices by 5 to 6% to maintain competitiveness, which has sparked increased buying interest from countries such as Thailand, Vietnam, Malaysia, and the Philippines. This demand surge from these regions is helping to stabilize prices and maintain market interest, offering some relief amid the overall downward price trend. Furthermore, the upcoming Rabi season in India is expected to be a critical indicator of broader market trends, influencing price movements and overall stability in the coming months.
US peanut prices dropped to USD 0.50/kg in W48, reflecting a 7.41% weekly increase but a 16.67% decline YoY from USD 0.60/kg. As of November 24, the US peanut harvest reached 93% of the forecasted area, slightly trailing the 2023 pace and the five-year average. While favorable weather conditions have supported progress, the pace of the peanut harvest has been slower compared to other crops. This slower harvest, combined with the lower YoY price, could signal a tightening in supply if production fails to meet expectations in the final stages, potentially leading to higher prices in the coming months as market conditions adjust.
In W48, Brazil's peanut prices decreased to USD 3.02/kg, a 5.33% drop week-on-week (WoW). The 2024/25 season is expected to see a record peanut production of 832,300 metric tons (mt), representing a 40.6% increase from the previous harvest. This surge in production is likely to exert downward pressure on prices, as the supply may surpass domestic and international demand. While favorable conditions and strong demand drive crop diversification into peanuts, weed resistance, and pest management challenges could impact agricultural competitiveness. Consequently, the anticipated supply surplus may disrupt current price levels, particularly if downstream demand from oil mills does not align with the increased availability of peanuts and peanut oil, potentially leading to price adjustments in the medium to long term.
Investments in irrigation systems and climate-resilient farming practices are critical to combat the impact of inconsistent rainfall and the resulting crop losses in regions such as Kurnool and The Gambia. Governments and organizations should provide farmers access to affordable irrigation technologies and promote climate-smart agricultural practices, such as drought-resistant peanut varieties. Collaborating to offer training, subsidies, or low-interest loans for such infrastructure. These measures would help stabilize yields and reduce the negative impact of weather fluctuations on peanut farming.
With India’s peanut market facing a price drop and increased competition from other countries like Brazil, exporters should strengthen market access and competitiveness. By diversifying export destinations beyond traditional markets, such as expanding trade with Southeast Asia, demand from countries like Indonesia, Thailand, and Malaysia can be leveraged. Additionally, pricing strategies that reflect global demand shifts, such as volume-based discounts or long-term contracts, can help stabilize peanut prices and ensure continued market interest. Engaging with international buyers through trade fairs or bilateral agreements could further enhance market presence and pricing stability.
Sources: Tridge, All Africa, Portal Do Agronegócio, Deccan Chronic, Chem Analyst
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