Groundnut (in shell)

Groundnut (Arachis hypogaea L.), native of South America is a major oilseed crop of India. Groundnut is typically grown in tropical and subtropical areas as a rain fed crop. It thrives best between 25-28ºC and 500 mm rainfall and on sandy loam and loamy soils. In India, groundnut is chiefly sown from May to June. In South- eastern region it is also sown during October to march. Groundnut It is used for different purposes e.g. food (raw, roasted or boiled, cooking oil), animal feed (pressings, seeds, green material, straw), and industrial raw material. Groundnut cotyledons are a concentrated source of protein, lipids, and dietary energy. It is a reasonable source of dietary minerals like potassium, phosphorus, and magnesium. The kernel can be used as snack food or for crushing to produce oil and a high protein meal. Groundnut Meal is a very good vegetable protein for poultry feed. Protein isolates derived from the meal are used in the manufacture of imitation milk as an enhancer to cow or buffalo milk. Groundnut shells are used as fuel in boilers and gasifiers in textiles, ceramics and chemical industries. Following is the composition of Groundnut by weight: Groundnut is cultivated in more than 100 countries in all six continents. Global production of groundnut is around 36 million MT (FAOSTAT data, 2005). China, India, Nigeria, Senegal, Sudan, Argentina and the USA are the major groundnut producing countries. EU, Indonesia, Canada, Malaysia and the Philippines are major importers while Argentina, India, USA, China, Vietnam, South Africa and Senegal are the major exporters of groundnut. India stands at 2 place in the world, both in area under groundnut and production. India produces around 65 lakh MT of groundnut in about 67 lakh hectares (FAOSTAT data, 2005). Gujarat, Andhra Pradesh, Tamilnadu and Karnataka are Major producing states. Other Groundnut producing states are: M.P. U.P. Rajasthan, Punjab and Orissa. Ahmedabad, Gondal, Junagarh and Rajkot in Gujarat, Adoni in Rayalseema region of Andhra Pradesh are the major trading centers for Groundnut. Following graph shows the annualized price volatility for groundnut (in shell).

The highest annualized price volatility during this period was 103.24% with average annualized volatility of 32%. Such high volatility causes price risk for participants in the value chain.

Area under groundnut as well as the yield of groundnut keep varying each year due to erratic monsoons, crop disease etc. Predominance of rain fed farming makes it vulnerable to monsoon fluctuations. This leads to fluctuating production and hence increased need for risk mitigation.

About Furnace Oil

At the exchange, we disseminate the spot prices of Groundnut (in shell) twice a day. We poll prices from randomly selected 30 market participants from a panel of 50 participants. After collecting raw prices, we filter them through a scientific process called bootstrapping, to remove outlying prices (i.e. prices that are too far away from the median) and then by averaging the filtered prices, spot price is arrived at. The Exchange is in collaboration with rural kiosk network entities, technology companies, news agencies, Television channels and banks for dissemination of NCDEX spot and futures prices.