What defines a good market in the peanut industry? Does a market with in-depth consumption prospects with high volatility make a good market?

Demand

If substantial demand exists, can we classify the market as favourable? Consider markets in Indonesia, the Philippines, and Thailand, where demand persists throughout the year, and prices fluctuate with each transaction. Despite a collective import volume of 400k tons annually, daily volatility, and gross margins ranging from 3-5%, can this be deemed a robust market? If high volume coupled with high volatility is undesirable, how about a market like China, with 3 million tons of imports, low volatility, and 3-5% margins? Well, we all know the answer to it, don't we? Therefore, consistent demand alone does not guarantee a good market. What, then, defines a good market?

Supply

Does a good market definition hinge on a surplus or scarcity of supply? Consider China's production of 18 million tons and India's 9 million tons, where, on average, 80% of their production is consumed domestically. In these nations, the intricate interplay between harvest and consumption results in a continual and steady rise in peanut prices. Despite high production, new product launches, processors, and shippers emerge yearly. If supply constraints persist, these regions with abundant supply resort to imports to meet demand. Consequently, the impact on consumption is marginal, and the primary effect lies in price fluctuations, whether the supply is ample or limited. In summary, determining the quality of a market within the peanut industry is inherently tied to a significant "X" factor called "sentiment." Although concrete supply and demand statistics are vital, the market's perception carries considerable weight. Simply put, a 10,000-ton stock may be considered inadequate in a good market scenario, while in an unfavourable one, 100 tons could be deemed excessive. Ain't that true?
Godspeed peanuts. 

GUJARAT:

The winter 2023 crop in Gujarat is currently at 30%, with certain regions holding 10%-50% of stocks. This disparity has led to farmers' reluctance to sell, impacting the demand for Rabi 2024 sowing, which is currently poor. Fennel and Psyllium Husk in Gujarat have tripled, causing a decline in groundnut acreage for the Rabi crop. Local demand for oil and snacks in January is also low.

RAJASTHAN:

In Rajasthan, crop quality and yields were poor, preventing exports, but domestic demand was good.
About 40-50% of peanut stocks remain with farmers and stockists. Despite the government purchasing at the MSP rate @ 63, it is deemed unsatisfactory for farmers, and domestic support is limited in January.

SOUTHERN REGION:

Karnataka arrivals started in many market yards in the southern region, with low arrivals, except in Raichur, Yadgir, and Gajendragadh. Sowing in Karnataka is at 30% only. Telangana is experiencing peak arrivals, slowing down the prices. Export demand is present and expected to continue until Apri. Tamil Nadu's summer crop is expected to arrive by the end of February, with a 10% higher yield than the previous year. Orissa's new crop is anticipated in mid-February; sowing in Orissa was reported at 80% of last year's levels.

The current harvest reflects 2023's favourable conditions. Still, it faces challenges ahead, notably a looming 15-20 day period of high temperatures in February, critical for crop yields, especially in phenological states R3-R4 short cycles and long cycles R2-R3. Concerns mount over potential crop stress due to insufficient soil moisture. Despite a calm post-year-end market, there's anticipation of a good harvest and possible price reductions. However, worries persist about impending shortages in Argentina's last months of loads to Europe (March/April/May 2024), impacting shipment volumes. Climate uncertainties heighten the risks, emphasizing the need for timely rain to ensure crop volume and quality. Market participants brace for potential supply and pricing fluctuations, closely monitoring developments in Argentina's harvest and their global market ramifications.

One of the weakest trends witnessed in China this January 2024, despite the new year just around the corner. The oil prices were seen trading between 1700$-1800$ with stringent QCs, and oil-crushing factories kept lowering their procurement prices daily. Local exporters faced poor margins and poor export volumes. The prices remained stagnant, and interest in importing Sudan, Senegal and other origins was seen at pessimistic levels. Futures trended between 8700-8900 RMB. Blanched prices were stagnant at 1300$ FOB 6171. Post-CNY, the market could be even worse.

Senegal

The market is slow compared to the 2023 season amid higher prices and a lack of Chinese buyers. The MSP at 285 CFA per ton is extraordinary at the moment. The ex-factory prices of oil-crushing grades with splits range from $875 to $950 per ton, while the 55 grade costs $1155 ex-factory

Gambia

The government has set a price of 280 CFA per ton for farmer procurement. The retail price range in Gambian dalasi for groundnuts is between $0.65 and $2.16 per kg.