Agri Business

Subdued trading keeps cashew firm

G. K. Nair Kochi | Updated on February 15, 2011

cashew_477660a.jpg   -  Business Line

Cashew market was steady last week with a firm undertone. Prices moved up slightly with W240 trading at around $4.35, W320 at around $3.85, Splits and Butts at around $3.25 and Pieces at around $3.05 (f.o.b.).

However, activity was limited because processors were not keen to sell at current levels and buyers do not seem to be in a hurry to buy.

However, on the outlook for the coming weeks, the trade said a “realistic view on the trend for 2011 can only be formed in April/May. Till then, the market will have to be prepared for volatility with a bias towards firmness.”

Processing in February-April will be lower than normal due to lower availability in 2010 and delay in 2011 crops, according to trade sources.

“If the offtake in the first quarter is not significantly lower than previous years, this could probably lead to a very tight supply position in the second quarter. And if buyers need to buy for the second quarter, they will have to pay higher prices as availability is limited,” Mr Pankaj N. Sampat, a Mumbai-based dealer told Business Line.

If kernel prices do not come down in the next 6-8 weeks, there is very little chance for lower Raw Cashew Nut (RCN) prices. If offtake drops substantially in the first quarter, kernel buyers may be able to keep away from the market for some time, he said. Reduced activity in the kernel market may mean that shellers may slow down their buying unless RCN prices come down. But, the fact that RCN stocks are low and 2011 arrivals are delayed may not allow them to wait too long as they have to keep factories running.

It seems that the pattern of nearby kernel activity is here to stay for some time, he said. “This will mean that there will be always be someone in the market and this will provide steady support to the market.” Shellers will be content to sell small volumes at regular intervals. There will be no pressure on them to reduce prices unless RCN prices come down. Price trend will change only if supplies in 2011 are normal and if the buying for near-bys is significantly lower in the second quarter.

There is “no fresh news from the RCN side – no adverse reports from any origin except for the earlier discussed delay in arrivals in Vietnam and India and the concern about Ivory Coast (IVC) movements. Overall, “we continue to feel that the market is very delicately poised. Pricing of kernels for long term will be difficult until there is some more information on kernel off take and RCN pricing”, he said.

A realistic view on the trend for 2011 can only be formed in April/May. Till then, the market will have to be prepared for volatility with a bias towards firmness unless kernel demand is very slow in next 2-3 months, trade sources said.

Published on February 15, 2011

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