Cashew continues to remain sluggish

Cashew market continued to remain sluggish last week. However, some processors in Vietnam sold some volume few cents lower for W320 from $4.40 to $4.45, splits at around $4.00, pieces at around $3.90/lb (f.o.b.). Large processors from Vietnam were quoting 5-10 cents higher, according to the trade.

Offers from India were W240 at around $4.90; W320 from $ 4.55 to $4.65; W450 at around $4.50; SW320 around $4.50 (f.o.b.). Some sales were made at these higher levels as well.

Domestic market

Domestic market also witnessed limited activity mainly for good quality product even though prices are high. For FAQ, wholesalers are waiting for signals about retail off take and fresh demand from the retailers before making further purchases from shellers, Mr Pankaj N. Sampat, a Mumbai-based dealer told Business Line .

There is almost zero activity in the raw cashew nut (RCN) market.

West Africa has very small unsold quantities. Some traders have product in Vietnam/India afloat but do not seem to be in a hurry to sell. Vietnam processors will probably buy after they have shipped the kernels sold recently. Large Indian processors may have adequate cover but small/medium processors will need to buy after Onam holidays.

Overseas buying

Some buyers in the US and Europe have picked up the lower offers in the last two weeks whereas others have been watching from the sidelines to see how things develop.

General feeling is that these two main markets need to cover for last quarter 2011 onwards. They are buying limited volume as required at regular intervals (regardless of price) and picking up stock when prices dip a bit.

Until there is a clear picture of demand trend for next six months or some change on supply side, this buying pattern is likely to continue, he said.

If the quiet period continues in Sep/Oct, either due to lower buying for next six months or due to external factors, kernel prices may drift lower and this could mean shellers will be cautious in buying Indonesia and East Africa RCN.

Kernel scene

“But if there is a reasonable activity in the kernel market in Sep/Oct – which is what most people expect unless there is some dramatic negative development – kernel prices will remain in the current range.

“If that happens, shellers will be active in the RCN market and this will keep prices high since availability is limited. Except for small quantities from Indonesia, there will be no new crop RCN available for India/Vietnam processors till Nov/Dec.

“Pricing for Tanzania and Mozambique RCN will depend on (a) Government policies (b) currency movements (c) kernel activity in Sep/Oct”.

Another factor to be watched, probably the most important for the next 2-3 months apart from the external factors, is how things develop in Brazil.

If the crop is good and RCN prices are reasonable, Brazil processors will come out to meet end 2011/early 2012 requirements.

If they are aggressive, kernel prices could drift by the end of the year. If the crop is normal, it may not make much difference.

“To sum up, Sep/Oct will be an interesting period. Developments and activities in (a) kernel market (b) Brazil/Indonesia/Africa crop and RCN pricing coupled with movement of (c) crops and prices of other nuts and (d) financial markets have to be watched closely to get a realistic idea of how cashew market will behave in the next six months”, he added.

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