Cashew stays steady with firm undertone

The cashew market was steady last week with a slightly firmer undertone and reasonable activity in the W320 variety in the range of $3.85-3.95 (f.o.b) per lb, mainly for Nov/Dec shipments.

However, some business was done for January-March shipments also. Some processors were able to sell at higher levels. There was hardly any business in other grades. Nominal levels were $4.10-4.30 per lb for W240; $3.75-3.85 for W450 and SW320; $3.55-3.65 for SW360; $3.15-3.30 for SSW; for Splits and Butts from $3.05-3.20 and for Pieces from $3.00-3.15 per lb (f.o.b), according to traders.

Steady domestic market

Domestic market in India was steady with reasonable activity in brokens, but not much trading in wholes except for inter-exporter trading at slightly higher levels.

China was buying steadily in Vietnam.

The Raw Cashew Nut (RCN) was almost without any activity. However, there were reports of some sales for Indonesia and Tanzania at around $1,525-1,550 a tonne (c&f). RCN traders with long positions in West African RCN, after having sold some volume in October at lower prices, do not seem to be in great hurry to sell now. Arrivals in Brazil so far have been higher than normal for this time of the year.

There is a wide range of crop estimates but a realistic figure will not be available before January.

The problems in Europe continue to occupy centre stage and this is affecting decision making at all levels, Mr Pankaj N Sampat, a Mumbai-based dealer told Business Line . “There is concern about currency movement, financing costs, impact on consumption, wages and other costs, risk appetite, etc,” he said.

All these are making people take short-term covers and increasing the potential for volatility.

He said that there was no change in the market fundamentals. The supply potential is better than it was in the first half of 2011. A confirmation that supply has been restored to normal levels will be available only by mid-2012 if the Northern crops are good, he said.

At the same time, he said, there is considerable concern about the demand for the first half of 2012. A reasonable estimate of this will be available in February/March 2012. The negatives of the high prices have been discounted in the current projections of demand. Apart from the prices, the economic situation and availability of products on shelves will have an important effect on the actual off-take.

If the demand decline is not as bad as expected, prices could inch up in the first quarter because nearby buying will continue as there is minimal forward cover. This would mean steady RCN prices at the beginning of the 2012 season which could soften later if the crops are good. “If the demand decline is more than expected and the crops are good, we could see a softening of prices in the second half of 2012”, he pointed out.

The traders, Mr Pankaj said, expects the kernel market to remain steady around the current levels for the next 2-3 months unless something dramatic happens in the financial markets. “The first potential turning point would be in February/March, when there will be some idea of demand trend and crop prospects. After that the next tipping point would be in May/June, when we can have realistic estimate of the 2012 crops,” he said.

In these very uncertain times, he suggested, “it would be prudent for everyone in the chain to have partial cover, sales or purchases, for the next few months to avoid being caught on the wrong foot in case of any sudden change on either side.”

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