The cashew market has been sluggish on slack demand in domestic and overseas markets for the past six weeks, while sellers are hesitant to offer at lower levels.

However, despite this quietness, some Vietnam operators carried out trade at lower levels but most processors in India and many in Vietnam were not willing to reduce prices.

Business reportedly took place from Vietnam for W240 at around $4.75 and W320 at around $4.40 per lb (f.o.b). Prices from India for W240 were at around $4.85-$4.90 and W320 from $4.55 to $4.60 an lb (f.o.b) and some stray business has been witnessed.

“This wide range of prices is distorting the market and making buyers wary of taking on large positions although they are picking up the lower offers,” Mr Pankaj Sampat, a Mumbai-based dealer told Business Line .

In the domestic market, he said, there was limited business by a few processors but in general, the market was sluggish. Wholesalers and stockists seem to be waiting for signals of retail off take at the beginning of the peak consumption season before taking on additional volume.

As far as Raw Cashew Nut (RCN) supply is concerned, he said, there are some stocks in Guinea Bissau but the stockists are holding on for high prices. The upcoming Southern crops are expected to be normal – although there are reports that adverse weather may affect the crop in some regions of Indonesia. Current price in Indonesia is very high at approximately $2,000 a tonne. The next six weeks will provide a reasonable idea of the crop prospects and prices in Indonesia and Brazil. Tanzanian prices will be known by end October or early November. Mozambique RCN prices will not be known until December, he said.

The market is in stalemate mode, traders said. Activity in the kernel market in the next 6-8 weeks will determine what direction the market will take.

RCN prices are unlikely to decline

If the kernel demand before end of October in either India/Asia or US /Europe is good, prices will remain in the current range. If demand in both the regions is normal to good, prices could move up a bit. In either case, RCN prices will not decline as availability till next March is limited, it said. Consequently, a change in price trend will be possible only in second quarter of 2012 provided Northern crops are good and supply becomes comfortable.

On the other hand, if kernel demand in both regions is slow for the next six weeks, prices could start drifting lower from end of October – more so if the Brazil crop is good. If this happens, shellers will be slow in buying, leading to lower RCN prices. And that will mean the year will end with higher than normal inventory – most probably in the form of RCN – with a potential of further downward pressure on prices, if the 2012 Northern crops are good or even normal.

“It is impossible to judge what will happen in the medium term, especially in the current situation when there are so many economical and financial uncertainties in the US and Europe. But the general feeling is that demand in September/October will not be so low as to trigger a price decline immediately,” trade sources claimed.

Indian demand may not be strong but since India is predominantly a spot market, there will certainly be steady buying during the peak consumption period up to end December/early January. Following the trend of short period buying, US/Europe will also have to buy some volume in the next 6-8 weeks for late 2011/early 2012 shipments. These two demand factors will support the market and the trend will change only if 2012 crops are normal to good.

“Only a dramatic fall in kernel buying in Sep-Nov could lead to lower prices before that and that is possible only if there are some big negative developments in the US and Europe economies and financial markets,” they said.

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