Ahmedabad, Sept 9 Reduced acreage, leaf blight disease, and climatic uncertainty are set to impact the groundnut crop in the largest grower - Gujarat. This comes in the backdrop of the prevailing drought situation in key consumer - China - leading to elevated prices for the oilseed in the season starting October.

Trader sources revealed that in spite of other edible oils - palm oil and soyabean oil - ruling lower in recent days, groundnut oil prices may stay firm on bullish sentiment due to festive consumption and the crop impact.

According to the Gujarat government's data, sowing has dipped by about 10 per cent to 17.08 lakh hectares from last year's 19.09 lakh hectares, and the first advance estimates on output suggest the crop size at 39.17 lakh tonnes for 2022-23, as against 43.59 lakh tonnes estimated for last year.

Nationally, the area under groundnut has reduced by 3.59 lakh hectares to 44.75 lakh hectares, as compared to 48.35 lakh hectares in the last year. The latest sowing data shows that Rajasthan has recorded acreage of 7.90 lakh hectares, Andhra Pradesh 5.25 lakh hectares, Madhya Pradesh 4.50 lakh hectares, Karnataka 3.65 lakh hectares and Maharashtra 1.57 lakh hectares.

Speaking to BusinessLine, Pankaj Nathwani of Gulab brand of groundnut oils, said sowing in the State has taken a hit to the tune of about 10-15 per cent. "Although, it is early to comment on the crop size, sowing has been lower than last year. So we expect some impact on the output. There are some reports of leaf blight disease in some growing areas, which would also impact the output," said Nathwani.

Trader sources believe that a lower crop and anticipated higher demand from local and export markets would keep groundnut prices above the minimum support price (MSP) of Rs 5,850 per quintal. Currently, spot rates for early sown crop, which has started arriving, has touched Rs 6,655 per quintal in the Gondal markets on Thursday. The arrival of new crop was reported at 3,514 quintals.

A trade body representing edible oil stakeholders from the State - Gujarat State Edible Oil and Edible Oil Seeds Association (GSEOEOSA) - noted that the crop condition depends on the rain during the next fortnight. "There is a drought situation in China, which is a large consumer of groundnut and would look for imports from countries like India. Crop arrival has been delayed in other growing nations such as Sudan and Senegal. So in the initial months, prices will rule firm," said Samir Shah, President of GSEOEOSA.

"If it rains in the next fortnight, we will see a positive impact on the crop, but in the current condition, it looks like the crop would remain around 20 lakh tonnes this year," said Shah.

While the trade expects demand pressure to keep groundnut prices firm, there is less likelihood of procurement activity by the government. "The prices are already higher than the MSP, so there is little likelihood of MSP activity," said Shah.

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