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Rising freight rates and container shortage are posing stiff challenges for the global cashew sector, which does not anticipate any major change in the market trend this year.
The logistics cost from Asia to Europe and the US that fell from March has again started moving up. Currently, the freight from Vietnam is about $6,000 for Europe and over $7,500 to the US. Even at these high rates, there are difficulties in getting containers or space on vessels, according to the cashew market report prepared by Samsun Traders.
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“If this situation continues, we will see greater divergence in destination and origin prices due to product being in the wrong place”, said Pankaj N Sampat of Samsun Traders.
Consumption trends
The global cashew market has rebounded since April after moving sideways in the first quarter of 2021. Vietnam W320 moved up from $2.70-2.90 range in February/March 2021 to the current range of $3.15-3.30 FOB.
However, the Indian market has not moved much in 2021 although there were some short-lived dips in the prices from small/medium processors when there was a lull in domestic demand. For most of the year so far, W320 has been in the range of $3.50-3.70 FOB, except for some stray sales in the $3.30-3.50 FOB range.
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On the other hand, the report said, consumption grew significantly in all markets (except India) last year. The 2021 first quarter indicated that the growth trend is continuing, albeit slightly slower in some markets. Indian consumption had picked up in the last two quarters, but the recent Covid surge is causing concern about the second quarter of 2021. The report expressed the hope that things would revive after July.
Uncertain situation
It is also pointed out that logistics problems in Africa and reduced Indian processing due to Covid restrictions will hit RCN arrivals into Vietnam and India and will be spread over a longer period, something similar to 2020.
“It is always difficult to predict which way prices will move. Especially in the current situation when there are so many challenges — Covid impact on economies + supply + processing + demand, logistic challenges on movement of RCN and finished product + quantities available for processing in Asia, etc”, Pankaj added.
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