Cashew prices moved up a few cents last week, although little business was done. Levels traded were $4.30-35 for W240 and $3.75-3.85 for W320. Most of the trades were for February-April shipments. Indian market has been quiet for the past two weeks and prices drifted lower from the peaks, dealers said.

Most buyers need to buy for shipment beyond April, but are trying to delay buying as much as they can, Mr Pankaj N. Sampat, a Mumbai-based dealer told Business Line . “They do not want to extend cover at current levels, and then find that first-quarter off-take is lower than planned. If the existing cover can take them through a few more weeks, they hope that prices will ease when raw cashew nut (RCN) arrivals peak in April/May. Then they can cover their second-half requirements,” he said. Asian demand is expected to be lower for a few weeks, which might lead to lower kernel prices If the buyers in the US and Europe also stay away from the market in February/March, then processors will be able to slow initial buying, leading to softer RCN prices in April/May. This, in turn, will aid further decline in kernel prices.

On the other hand, traders said, if there is steady periodic buying from the US and Europe, like in the last 6-9 months, prices will remain firm and may even move up a bit, in case anyone wants to buy volume for spread delivery. This will add to the need of processors to start buying RCN quickly, as a result of which opening prices will not come down. Crop shortage — actual or perceived — or delay in movement of RCN will only push up RCN prices. Consequently, kernel prices will remain firm, they said.

Tepid trade

According to Mr Pankaj, there is not much trading in RCN. Mozambique RCN is offered at around $1,450 a tonne, and Nigerian RCN is reportedly trading at around $1,225 a tonne. Indicative offers are at around $1,500 a tonne for Benin and around $1,425 a tonne for Ivory Coast/Ghana.

“Our feeling is that there will be quite a bit of volatility in offers for West African RCN during the next few weeks,” he said. Actual opening price levels will be known only by mid- or late-March and bulk of the trade will happen in April/early-May. Till mid-March, all quotes are speculative and can only be used as an indication of the trend.

At the moment, all origins are expecting normal crops, but low stocks with Indian and Vietnamese processors means they may not have the luxury of waiting for peak arrivals to bring prices down and might have to start buying as soon as physical arrivals start. The industry needs good crops in all origins in 2011 to replenish stocks and balance supply and demand, he said. In addition to this, the other short-term factors which will affect 2011 market trend are the off-take figures in the first quarter and the kernel activity in February/March from the two major importing regions. Apart from this, “we have to keep a close watch on external factors — economic news (signals are for a smoother and growth year) plus currency movements plus prices of other nuts,” he said.

It is impossible to judge or even guess the market trend beyond a few months, he said. But the scales are tilted in favour of a steady market for the next few months. Although we might see small dip in prices in the coming weeks, if activity is slow or if there are encouraging reports from origin, a significant price decline in the short term is possible only if buying interest is low plus all the crops are very good, and there are no supply distortions, he added.

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