Cashew market rallies as buying support continues

The cashew market continued its rally last week on good buying support.

The market witnessed a fair amount of buying interest, mainly for June/July and some for August/September as well, but trades/selling interest was limited, according to trade sources in Mumbai.

Business was done for W240 from $4.50 to $4.55, W320 from $4.10 to $4.20, SW320 at around $4.00, SW360 at around $3.85, Splits at around $3.75, Pieces at around $3.60 (f.o.b).

The domestic market has become active in the past two weeks, mainly for brokens. Splits and pieces are trading around 8-10 per cent above international market. From July, “we expect off take for the wholes as well in the domestic market”, they said.

Raw cashew nut (RCN) market is also firm. Afloat parcels of Ivory Coast (IVC)/Ghana are trading at around $1,400 to $1,450 a tonne (c&f) and May/June shipments of Guinea Bissau are trading at around $1,600 a tonne (c&f).

Offers for lower quality IVC for May/June which had gone down to $1,200 are now above $1,300 a tonne (c&f). Shipments of IVC/Ghana are still very slow. In addition to the slow shipments, there is an additional problem of longer than normal transit time, which means that the first large lots have still to arrive in India and Vietnam, said Mr Pankaj N. Sampat, a Mumbai-based dealer.

It seems that reasonable flow of RCN will start in couple of weeks and will continue till October/November instead of the normal April-July/August. This means lower processing for many months, less pressure on shellers, lower kernel yields (total and white/fancy grades), he said.

As expected, there continues to be regular buying from some market or the other every few weeks. Every buying spell is taking prices to a new higher level.

Although nobody – shellers or kernel buyers – is taking any large position, the regular buying is supporting the market. And the higher RCN prices and tightness of supply is causing prices to move up a few cents every few weeks.

This trend will probably continue till the end of the year. It may change after October if Southern crops are good and/or contracting for end 2011/beginning 2012 is very much lower than normal. Otherwise, the trend will continue till Northern crops start in February/March.

“Hence, we cannot expect any significant decline in prices until the trend and pattern is broken,” Mr Pankaj told Business Line .

“In the last year or so, there have been some major changes in the fundamentals (1) significantly higher raw material prices, (2) higher processing and logistic costs, (3) stagnant/lower production and, (4) steady demand growth in many markets and steady/lower consumption in others.

“The change in consumption distribution over the last 3-4 years and tight supply over the last two years, has led to to change in operational strategies. Selling pressure is reduced and buying patterns have changed,” he said.

Overall, the last 9-12 months have been exceptionally difficult for everyone in the cashew business and it appears that it will continue to be like that for a few months more.

Till supply-demand balance is restored and a new trading range (whatever it be) is established, the uncertainty will continue to keep the market “on the boil”.

But markets are known to surprise everyone and can turn quickly on some unexpected trigger, the trade predicted.

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