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Steady offtake likely to cap fall in cashew prices

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G K Nair

Kochi, Aug 9

Cashew kernel prices are unlikely to decline this year, though there could be small dips when the market is quiet. Such a situation could be attributed to the fundamental factors coupled with the peak consumption in Asia in August-November and the regular buying pattern by the US and Europe for few months at a time.

Therefore, “we can expect good activity in next two to three months,” Mr Pankaj N Sampat, a major Mumbai-based dealer, told Business Line.

Asian Consumption

Although consumption in some markets in 2010 will be lower than 2009, overall offtake is unlikely to be affected due to good Asian consumption. “End of 2010 will see lower than normal inventories, especially in the major importing countries, which have been buying few months' needs at a time,” he said. Tightness in supply will ease in the second half of 2011 only if the northern crops are good, i.e., above normal, or, if there is going to be a big drop in demand in the first half of 2011.

“We might see a price decline in second or third quarter of 2011 but it will depend on crops and first half demand,” he said. The only other reason for a reversal of current firm trend would be external factors (economic and financial situation) or a big drop in prices of other nuts.

“Although we are not overly bullish about the long term (too many variables and change in market structure make it difficult to predict the trend beyond a few months) we do feel that market will continue to move around the current levels with possibility of some price increase in the next 2-3 months — any dip in the meantime would be an opportunity to cover part of the needs (at least for next 2-3 quarters),” he said.

Markets

Cashew market was quiet this week. Some processors in India and Vietnam sold W320 few cents lower than last week. But in general, price levels were unchanged — W240 was between $3.3 and $3.35, W320 around $3.15, W450 between $2.95 and $3, SW320 around $3, SW360 around $2.8 , Splits/Butts were at between $2.65 and $2.7 (f.o.b).

Large processors in both origins were not willing to accept bids at lower levels — either nearbys or forwards, traders said.

Raw cashew nut market was steady with afloat/spot parcels of Ivory Coast being traded at around $950 a tonne and Guinea Bissau at around $1,150 a tonne (c&f). It is too early to say anything about the East African crop/prices. However, it is more or less certain that Tanzania will increase export duty, the traders said. Prices for early shipments from Indonesia are very high, they added.

(This article was published in the Business Line print edition dated August 10, 2010)
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