Cashew market sluggish on ‘higher than normal uncertainties'

Cashew market continued to remain sluggish with some business for W320 with the US, Europe and Australia, mainly for November/December shipments and very small volume for first quarter of 2012 while some stray business has taken place for other grades also.

Last week trades/offers were made in the range of $4.00-4.25 for W240; $3.80-3.95 for W320; $3.75-3.80 for W450 and SW320; $3.50-3.60 for SW360; $3.10-3.20 for SSW; $3.00-3.15 for Splits and Butts, and $2.85-3.05 for Pieces.

Although some activities were there in the Indian domestic market for Pieces, prices remained unchanged. China continued to be a steady buyer in Vietnam but not for big volumes, trade sources said.

Except for one large tender in Kerala during the week, there was not much activity in the Raw Cashew Nut (RCN) market. In fact, the RCN market has been very quiet for a long time, as most of the processors in India and Vietnam were on the sidelines, Mr Pankaj N Sampat, a Mumbai-based dealer told

Business Line . Although they will need to buy for processing in January-April, they seem to be waiting to make some sales for first quarter before buying, he said. Nominal RCN prices are around $1,000 a tonne for Mozambique, from $1,200-1,400 a tonne for West Africa, around $1,450 a tonne for Indonesia and around $1,500 a tonne for Tanzania.

As regards market prospects, so far there has been no change in the situation in the previous weeks, he said. Market seems to be waiting for correct direction, the said.

Supply situation

However, “supply situation now is better than first half of the year”, he said. Coupled with lower off take in the last few months, “we are getting close to a supply-demand balance. But a full restoration will happen only if the 2012 northern crops are good and if there is a further decline in off take in the first 3-4 months of 2012. Till March/April, we will have no idea of how these two factors will play out”, Mr Pankaj said.

There is a virtual see-saw in the economic situation in the US and Europe as “things look okay to good one day and bad to very bad the next”. What happens in their financial markets will play an important role in the strategies (and risk appetite) of manufacturers and retailers and consequently affect the demand for (and prices of) all commodities in all regions, he claimed.

Until there is some clarity on the demand side and some stability in the financial markets, it seems that business will continue in small tranches for short periods. This will keep the market moving sideways in a narrow range. A significant move will happen only if business is done for a reasonable volume for a longer period. Timing of this, if it happens, will determine the direction of the move.

Overall, feeling is that higher than normal uncertainties will continue for some time. Until there is some clarity, on fundamental and external factors, it would be appropriate for all links in the chain to cover at least the core portion of their positions to reduce the adverse consequences of any sudden move in either direction.