Cashew rises despite low buying at higher rates

Prices rose 5-7 per cent during the week in the domestic cashew market. Large processors offered limited quantity at the higher price and small ones mostly avoided selling at the lower price. Trade sources in Mumbai said there was hardly any buying at higher prices. While some business was done for shipments up to December, some buyers bought for the first quarter of 2012, they said.

The W240 variety was quoted at $4.85-$4.95, W320 at $4.60-$4.70, W450 at $4.50-$4.55, SW320 at $4.50-$4.60, splits at $4.15-$4.20 and pieces at $4.00-$4.05 (f.o.b.) in a firm overseas cashew market.

Indian domestic market remained firm. Export equivalent of recently traded levels were as follows: W320 at around $4.80, splits at around $4.60 and pieces at around $4.40 (f.o.b.). There is good demand for brokens and moderate demand for wholes at current levels but stocks for prompt delivery are limited. August to November or December is the peak-consumption period. “Depending on the offtake by retailers in the first half of August, wholesalers will be in the market for next round of buying by end of August/early September to replenish their stocks and build up inventory,” Mr Pankaj Sampath, a Mumbai-based dealer, told Business Line .

There were no new trades for raw cashew nuts (RCN) with origins. Resellers offered for Guniea Bissau at around $1,700, for Ghana at around $1,550 and for Ivory Coast at around $1,450 (c & f). Regional processors bought small lots at higher prices as they have to increase production to meet peak-season demand. “Indian imports in 2011 will be lower, and there is significant variation in total and grade-wise outturn from all origins,” Mr Sampath said.

New buying pattern

Normally, July to mid-August are dull periods in the US and the EU markets due to summer holidays. However, a changed buying pattern there has kept the market active during this period, too. As short-term buying during the period continues, regular buying is expected to continue for some time now. Prices could fall in the next six months if demand for kernel drops drastically during August-October, which seems unlikely as of now, he said.

Outlook for the first half of 2012 is hazy. Prices of the southern crop of RCN will depend on crop prospects and kernel prices during August-November. They will remain firm even if there is at least a moderate demand during the first quarter of 2012. Any adverse crop news will only add to the firmness.

If the southern crop prices remain high, shellers will not be able to reduce kernel prices during the first half of 2012. Stakeholders will refrain from long positions unless supplies are restored or demand drops around mid-2012. The resultant regular buying for short-term will support the market. “Developments in the next eight weeks will determine whether it will continue in the current range (with an upward bias) for rest of the year or start drifting a little lower in the last quarter,” he added.

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