Agri Business

Uncertainty grips cashew market as offtake drops

G.K. Nair Kochi | Updated on November 15, 2017 Published on April 17, 2012


The cashew market turned buoyant with reasonable activity last week and most of the activities were in “whole grades” that moved up by 10-15 cents a lb in the last two weeks.

There was not much activity in brokens but offers for those also moved up a bit. Price range during the week was W240 from $3.70 to $3.85 per lb, W320 from $3.30 to $3.40, W450 from $3.10 to $3.20, SW320 from $3.15 to $3.25, splits at around $2.35, butts at around $2.40, pieces at around $2.05 per lb (fob).

The Indian domestic market was quiet. There were reports of some sales from Vietnam to China in the last few days, according to Mumbai-based trade sources.

There are continued reports of reduced offtake and some concern whether there will be any pick up in the coming months in view of the uncertainty over price movements, Mr Pankan N Sampat, a Mumbai-based dealer told Business Line.

In the last few days, “there has been some buying interest but the volume of interest (and actual trades) is much lower than normal. When market is soft, shellers are reluctant to sell because they have not covered raw cashew nut (RCN) and future RCN price trend is uncertain,” he said.

When market firms up a bit, buyers are reluctant to buy because they are not sure whether the offtake will improve in the coming weeks or later and to what extent. “Our feeling is that if prices remain around at current levels, plus or minus 5-7 per cent, off take in second half will be significantly higher than what we have seen since September/October 2011,” he claimed.

It seems that the present trend of short bursts of activity will continue until there is a better picture of the fundamental supply and demand factors. Meantime, volatility will continue with potential of sharp moves depending on actual activity, news and rumours. Pick up in demand will result in a spike in kernel prices. Any news of improvement in RCN flow will lead to a softer market for RCN and kernels as well.

RCN Market steady

Activities in the RCN are limited as shellers are reluctant to buy any big volumes unless they see some good demand for kernels for forwards. Despite that, RCN market continues to be very steady.

Business is being done for Tanzania above $1,250 a tonne, Benin at around $1,050 and Ivory Coast (IVC) at around $900 a tonne (c&f). Although it is too early to have real idea of crop size, slow arrivals so far are causing concern. Add to this, there are reports of lower kernels yields in many areas. A better picture should be available by mid-May, Mr Pankaj said.

Even if the West African crops turn out to be normal, there could be a period when kernel supplies will be tight for a few weeks due to reduced processing in India and Vietnam due to late arrival of African RCN.

By middle of the year, a realistic and stable trading range for rest of the year should be established, he said. It could be at around current levels or slightly lower if there is no pick up in kernel demand in the second quarter, slightly higher if demand revives coupled with normal crops and substantially higher if there is a big crop shortage, he added.

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Published on April 17, 2012
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