Prices dropped drastically within a week by Rs 1,200-1,300 per quintal from their previous high of Rs 3,600-3,800.

The price of groundnut at the muhrat trading held last week on October 21 was quoted at Rs 3,600 per quintal. Last Thursday being a holiday, the prices crashed in just four days.

According to Naresh Chandarana a leading trader, the price crash was mainly due to lack of demand from traders against heavy arrivals of new crop.

Prices had peaked during the first week of September as the old stock was completely exhausted and the new crop was delayed due to heavy rains which continued beyond September. This created a void in the stock position against heavy festival buying.

Even after the third week of September, newcrop arrivals were almost at negligible levels and had a high moisture content.

The last five days have witnessed substantial arrivals from producing centres in the southern India, especially from Andhra Pradesh and Karnataka. The crop in Karnataka is believed to have been good and further arrivals are yet expected.

Prices may decline further as the likelihood of a lessened export demand may dampen the spirit. Exports to Europe may suffer due to the aflatoxin controversy, while exports to south-east Asian countries were already hampered due to the currency crisis in these countries.

According to market sources, export consignments for November Dock delivery have been contracted at a substantially lower price of Rs 2,500-2,525 per quintal during the week.