Cashew prices remained unchanged during the last couple of weeks, despite some pick-up in activity. Fairly good quantity was traded in the last fortnight by some processors at $3.65 to $3.75 (fob) for W320, whereas large packers sold limited quantities at around $3.85 (fob).

Meanwhile, some business was also done few cents higher than off-markets. W240 traded at $4.30-4.35 (fob), but the quantities available were limited.

The Raw Cashew Nut (RCN) market was quiet as there was very little unsold stock. Shipments from Tanzania and Mozambique are likely to be higher than last season but as the relative quantities were small, estimated at less than 10 per cent of world production, and came after disappointing Northern Hemisphere crops, processors were forced to pay high prices, Mumbai-based trade sources said.

For the next few weeks, RCN business will be limited to resale of Tanzania and Mozambique RCN. To take advantage of low inventories, RCN traders will release stocks slowly unless the new crop arrivals in India and Vietnam are earlier than expected. Realistic West African RCN price trend will not be known till late March/early-April, Mr Pankaj N. Sampat, a Mumbai-based dealer, told Business Line .

“Everybody in the chain — RCN traders, shellers, kernel traders, roasters, retailers — is wary,” he said. There is lot of haziness about kernel demand and crop prospects. “Impact of higher prices on demand, and higher processing costs on kernel and RCN prices is to be seen,” he said.

Double-edged sword

As prices are high, buyers are not keen to cover more than what they absolutely need. Specially because there is a big question mark about impact of high prices on demand. “Although there is risk of being left without the product, buyers seem to be willing to wait rather than find themselves holding high priced inventory if the demand drops dramatically. This is a double-edged sword because if usage does not drop too much, the steady buying at regular intervals will keep the market firm,” he said.

However, some processors, from time to time, are selling at the lower end of the range. This, coupled with some selling by traders, is providing some respite from high prices. Otherwise, most sellers are reluctant to reduce prices to get sales because there is no RCN available for prompt shipment to cover against sales, Mr Pankaj said.

Unless RCN prices ease significantly, “they will be content to sell small volumes at each spike”. For the last several months this strategy has been working well. Unless there is a big fall in demand or prospect of big increase in supply, there is no inducement for sellers to change their selling pattern.

Not sustainable

Many people feel that “current price levels — highest we have seen — cannot be sustained and the market should drift lower when the big Northern crops start arriving.” This cannot be ruled out but a large decline does not seem likely in the medium term due to factors such as (a) empty pipeline or low inventories, (b) higher processing costs, and (c) steady and regular buying for spot and near-bys.

“We expect some volatility for 2-3 months and a steady market around current range for most of the year, with a possibility of some increase if there any supply shortage/distortion or if the demand is not as badly impacted as feared. A big change in the market trend in 2011 is possible only if all the upcoming crops are good (and move without disturbance) and if the buying interest in the next 2-3 months is slow,” the trade added.

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