Agri Business

Cashew market seen buoyant in short term

G.K. Nair Kochi | Updated on May 14, 2012 Published on May 14, 2012

cashew

The cashew market that has been showing some buoyancy in recent days was quiet last week. With the undertone being firm, prices were steady.

However, offers were a few cents higher than last traded levels. Business was done for W240 from $4.15 to $4.25; W320 from $3.75 to $3.85; W450 at around $3.65; SW320 at around $3.60; Splits and Butts at around $2.80; Pieces from $2.30 to $2.40 a pound (f.o.b.).

The domestic market was active with prices moving up by about 15 per cent in the last two weeks, Mr Pankaj N. Sampat, a Mumbai-based dealer said.

There have been tremendous fluctuations in kernel prices that were down by 10 per cent in March whereas in April it was up by 15 per cent, he said. “Such large price movements are not good for any link in the chain. Apart from the big price fluctuations in the last three years, the industry has seen several bouts of uncertainty on the supply side and sustained uncertainty about demand trends,” he said.

Volatility and uncertainty have an adverse impact on the health and growth of any industry. The impact is aggravated in the case of an industry like cashew which is fragmented on the supply side and consolidated on the demand side.

RCN MARKET FIRM

The raw cashew nut market (RCN) market also continued to be firm. Trades were reported for Tanzania from $1,350 to $1,425 a tonne, for Benin from $1,150 to $1,250, for Ivory Coast (IVC) from $1,050 to $1,125 a tonne (c&f). Segabi RCN is being talked of at around $1,400 a tonne (c&f). There is lot of uncertainty and confusion about West African crops, which is not unusual, he said. Due to the delays in harvesting and consequent slow arrivals coupled with logistics problems, it is quite likely that crops and large shipments will continue for a few weeks or even couple of months longer than normal. So, realistic crop figures may not be available till August or even till September.

A couple of things, he said, are certain, namely, the kernel yields are definitely lower in almost all regions and shipments are much slower than normal due to various logistics issues in each origin. This will mean reduced processing during May/June and maybe even in July. Also, later shipments could mean further reduction in kernel yields.

For the long term, the industry needs to work together to reduce the inefficiencies and improve the working and infrastructure in the production and post-harvesting stages. This will bring down the supply uncertainties besides reducing the deterioration in RCN quality and increase RCN production and kernel availability leading to a smoother, evenly distributed supply, Mr Pankaj said. Consequently, the fluctuation in prices would come down.

On the demand side, the last two quarters have seen significant declines in use in all markets. It is hoped that the current quarter may see some improvement in usage. The third quarter should see a noticeable increase in demand, especially in Asia, provided the prices rise do not rise too high from current levels. At the moment, it seems that there is still some room for price increase based on the higher RCN prices and possibilities of reduced kernel availability in the next 2-3 months.

It also seems that if the prices go up too much, it could have an adverse impact on use in the main importing regions in the medium term. Major retailers (brands and private labels) could soft-pedal a product which sees large price movements in short periods.

For the time being, the market is delicately poised. The supply tightness in the next 2-3 months could lead to some more price increase. The trend for the rest of the year will depend on what happens with RCN prices and movement during May-August, Mr Pankaj said.

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Published on May 14, 2012
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