Cashew market buoyant on buying support

G.K. Nair Kochi | Updated on March 12, 2018

Separating nuts from cashew fruits after plucking from trees - Photo: S. Rambabu   -  Business Line

The cashew market last week witnessed buoyancy with the prices moving up on reasonable activity following emergence of some buying support.

“The prices moved up a few cents in the latter part of the week,” trade sources told Business Line. Business was done for W320 from $3.85 to $3.95, W450 and SW320 from $3.75 to $3.80, SW360 from $3.55 to $3.65, Splits at around $3.45, Pieces around $3.30 (fob). In fact, some processors were able to sell few cents higher, they said. Lower offers are no longer available from both origins. Prices moved up in the domestic market as well.

The Raw Cashew Nut (RCN) market continued to see a wide range of prices depending on origin, quality and payment terms. Shipments are expected to move faster in May although this is not certain as there are lot of logistic problems in several ports. Based on cutting test results in origin, kernel yields from most origins are expected to be lower than normal. Vietnam has been more aggressive in West Africa than normal. Coupled with the quantities being picked up by Brazil, this will leave substantially lower quantity for Indian processors, Mr Pankaj N. Sampat, a Mumbai-based dealer told Business Line.

Bad crop years

As discussed earlier, he said, processing in February-April has been much lower than normal and some processors have been running even to less than 50 per cent of capacity. May is also expected to be slow with bulk of RCN arriving in India and Vietnam from mid-June. “If you take into account lower kernel yields in coming months, it means that the pipeline will continue to be tight in the foreseeable future. Supply will become comfortable only after there is an increase in production. This can happen only if 2011-12 crops are really good – we have had two consecutive bad crop years,” he said.

Usage in some markets will be affected by the high prices, but even a double-digit decline in some markets will not equal the supply shortage from two bad crops. In Asia, the high prices have not had any impact on usage. In the last quarter of 2010, in fact, the demand was strong despite prices being at historical high levels, he said.

In the next three-four months, “we expect good demand in Asia (including West Asia) for the traditional festivals”, the trade said. Also the two big importing regions – the US and EU – are expected to continue their pattern of buying for few months requirement. US Dollar has moved up about 3.50 per cent in two days at the end of last week. “If it resumes decline in few weeks (or even remains at around current levels) the cost for EU, Australia and some other markets will continue to be at around 2010 average – this should reduce the impact of higher prices when contracts are being made for late 2011 and early 2012 deliveries,” trade sources claimed

Prices to stay high

There is a view that all this means that prices can go higher before they start coming down (when supply improves or if demand in all markets sees a big decline). “Our feeling is that even if prices do not go up much, there is very little chance of any significant decline in prices for next few months (although we may probably see some dips when some processors need to sell to raise cash to pay for RCN purchases),” Mr Pankaj said.

“We can expect the market to be steady to firm in the foreseeable future – change in trend and range is possible only when supply becomes comfortable, which is unlikely in the near term or something unexpected happens on external factors”, he added.

Published on May 10, 2011

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