The cashew market continued to be sluggish and for over a month now little volume has been traded with the US and Europe, though there has been reasonable business with other markets.

During the last two weeks, some processors from Vietnam and India sold W320 to the US and Europe at lower levels, that is, at around $3.65 (f.o.b) because they do not have prior sales and need to move stocks before new crops start in March, trade sources said.

Despite the limited buying interest, most processors from both origins were quoting more than 15-20 cents higher. They do not have much to sell for first quarter and they are not willing to sell at lower prices for second and third quarter because: (a) RCN prices have been high in the fourth quarter; (b) processing costs are going up in first quarter; and (c) there is uncertainty about RCN pricing (and movement) in the second quarter.

“They do not want to sell short unless they get a reasonable premium to cover high costs (and any supply side problems),” Mr Pankaj N. Sampat, a Mumbai-based dealer, told Business Line .

Uncertainty of demand trend makes buyers wary as well, he said. “They do not want to be carrying long positions at prices, which are the highest ever and then see a dramatic drop in demand. At the same time, they need to buy at regular intervals to keep pipeline filled to the bare minimum. This hand-to-mouth buying will continue to provide floor to the market till we reach a ‘tipping point',” he said.

Tight supply

There is no change in fundamentals, traders said. Supply will continue to be tight in first half – tightness will ease slowly in second half if 2011 crops are good (or at least normal). Normal supply will be restored only if 2011 crops are at least normal and 2011 demand is dramatically reduced.

Steady demand is expected in Asia in 2011 but there is uncertainty about the US and Europe, they said.

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