Breaking the sluggishness in recent days, the cashew market last week witnessed more buying interest than that of the previous few weeks, even though the volume traded was limited, as there were few sellers in the market.

Prices moved up a few cents for all grades to at around $4.30 for W240, at around $3.80 for W320, at around $3.35 for Splits/Butts, at around $3.20 for Pieces and some processors were even able to sell few cents higher.

Indian domestic market showed signs of revival in demand for brokens and the prices were about 10-15 per cent higher than that of the international market, trade sources said.

Meanwhile on the raw cashew nut (RCN) front, there has not been any encouraging news. Arrivals in India and Vietnam have been slow so far which has pushed up the prices very high, Mr Pankaj N. Sampat, a Mumbai-based dealer told Business Line .

Uncertainty

Benin expected to start shipping in second half of March. Uncertainty still hovered over the movement from Ivory Coast (IVC), he said. RCN available for processing in India and Vietnam in April-May will be much lower than normal. Until sellers have firm news about RCN shipments, they will be reluctant to make sales. ?This means reduced liquidity and could cause sudden spike in prices if there is any big buying interest before supply situation improves,? he predicted.

US imports of cashews in 2010 were 1,21,270 tonnes, registering an increase of 1.85 per cent from that of 2009. Origin-wise shares showed Vietnam on top with 58,540 tonnes (about two per cent higher) followed by India 30,720 tonnes (marginally higher), Brazil 5,010 tonnes (about 15 per cent lower) and others 6,860 tonnes (marginally lower). ?We do not have figures for EU imports but believe that they may not be much different than 2009. Imports in first half of 2011 will give some indication of impact of high prices on usage and that will help to determine buying interest for the second half,? he said.

Chance for a dip

If demand is very slow in coming months and if (or when) supply situation improves, ?we might see prices drifting lower but that may not happen till middle or second half of the year as it will take time for the supply-demand imbalance to be corrected. Till then, we can expect prices to move around current levels.?

Day by day, the outlook is becoming hazier as there seems to be no end to the tunnel. Historically high prices are causing concern about impact on usage. Supply side constraints are putting a question mark on kernel availability in second quarter (and may be beyond that as well). Even if crops are normal, RCN may not reach processors in time and this could mean significant shortage for few weeks and maybe months. ?Lack of product could mean lost sales (at the retail level, food / snack purchases are not postponed). This could have great impact on 2011 usage but the extent may not be known until it is too late,? he said.

Everybody is being very cautious. Selling and buying is being done for short periods. This increases importance of spot prices and also means higher volatility. Inability to judge trend and take reasonable forward positions exposes everyone to huge risk of sudden moves in prices depending on news and developments on supply or demand side, dealers said.

Improvement on supply side or negative news from importing countries could have an immediate and significant impact on sentiment and trend.

But, for the time being, there is nothing on the horizon to change the firm undertone of the market, they added.

Related Topics
comment COMMENT NOW