Agri Business

Cashew prices gain on buying, tight supplies

G K Nair Kochi | Updated on June 20, 2011

CASHEW

Increasing processing costs, lower output seen lifting prices



Cashew prices continued its upward run last week with the price for W320 moving up by another 2-3 per cent and business was done in the range of $4.50 to $4.60 (f.o.b) and like in any firm market, some processors sold a few cents higher.

The Differential for W240 came down to 25-30 cents. Discount for W450 narrowed to 10 cents with almost nothing available for nearbys, trade sources said. Discount for SW increased but not much was available for nearbys. There was good demand for Brokens-Splits / Butts at around $3.90 and Pieces were at around $3.80 (f.o.b).

In the Indian domestic market, prices for Splits and Pieces moved up by another 5 per cent during the week. Buying for wholes has also started in a small way with good premiums being obtained by a few processors, they said.

Raw Cashew Nut (RCN) market also moved up for good quality parcels. There is not much unsold volume of good quality in origins (except Bissau). Resale of good quality spot/ afloat/under shipment parcels was taking place at higher levels i.e., at around $1,700 for Bissau, $1,500-$1,550 for Benin and $1,400-$1,450 for Ivory Coast (IVC)/Ghana.

At the same time, there were quite a few low quality parcels that arrived

recently in India, which are offered at a significant discount. Brazil is reported have bought over 25,000 tonnes, mainly in Ghana but some quantity in Guinea Bissau as well, Mr Pankaj N Sampat, a Mumbai-based dealer told Business Line.

Kernel shipments have been lower than normal in the last 3-4 months, which is expected to become normal from July. However, “it will take few months of above normal shipments to replenish inventories. So, supply will continue to be tight for a few months,” he said.

Cashew prices have risen 100 per cent since beginning of 2009 but this has been a sustained continuous rise with small periodic dips, except for a sudden 10 per cent drop in the first quarter of 2010.

Part of the increase is due to increase of 30-35 per cent in processing costs, which account for 30 to 40 per cent of kernel cost, depending on raw material cost. “A larger portion is due to the increase in raw material cost and lower production vs steady or growing demand,” Mr Pankaj said.

There is widespread concern that these high prices will have a long term impact on the usage of cashews in the US and Europe, he said. “We will have some idea of this by end of 2011 or first quarter of 2012. Also, if the 2011/12 crops are good, that should improve the supply situation and provide some relief in raw material prices”. Until one or both happen, the price trend will not be broken. When the trend changes, the decline will be gradual, unless there is a big drop in demand in all markets, including Asia, which could mean a sudden decline in prices.

For the time being, it appears that the tight supply position coupled with regular periodic buying by some market or the other will keep the market firm, the trade added.

Published on June 20, 2011

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