Lukewarm trading continues in cashew market

G. K. Nair Kochi | Updated on April 04, 2011

A roadside vendor selling cashews: Photo - RM. Rajarathinam   -  Business Line

Cashew market continued to remain very quiet last week although limited quantity of W320 was sold by some processors at around $3.90 (f.o.b), but in general, there was not much change in prices.

Offers were made for W240 at around $4.45; W320 at around $4.00-4.05; W450 at around $3.85; SW from $3.65 to $3.85; Splits and Butts around $3.45 and Pieces at around $3.30 (f.o.b). Resellers sold some quantities below origin prices, trade sources said.

Raw Cashew Nut (RCN) prices have come down by 3-4 per cent in the last two weeks because, one, there are reports that yields in most origins are lower than normal and two, shellers who have bought some quantities are reluctant to buy more till they make some kernel sales at workable prices and others are waiting to see how market develops in coming weeks.

Benin is at around $1,550 and Ivory Coast is at around $1,400, even these reduced prices are at least 5 per cent higher than kernel parity, Mr Pankaj N. Sampat, a Mumbai-based trader told Business Line. Fair volume has been traded at higher prices for April shipment but it is to be seen how much will be shipped as there are reports of significant blockages on routes out of Ivory Coast and possible delays at alternative ports, he said.

If RCN shipments in April are low, there will be prolonged tightness in RCN availability for conversion to kernels in India and Vietnam and further reduction in yields of RCN that will be shipped later.

In the last two quarters, most of the business has been for nearbys, 2 or 3 months forward, due to reluctance of buyers to cover for longer periods due to the high prices and concern about retail off-take and reluctance of shellers to take large forward positions due to concerns about flow of RCN and its prices.

This is a double-edged sword. Lack of forward sales might force shellers to reduce prices to make sales if kernel demand is slow and RCN flow is normal in April/May. Lack of forward cover might force buyers to continue buying at higher prices if off-take is not as badly affected as feared and/or availability in second quarter is as low as expected due to slow RCN movements, he said.

As discussed earlier, the trade said, timing of movement of IVC RCN, as 20 per cent of world production comes from Ivory Coast, will be the most important factor affecting market in the next two quarters. The other factor, albeit slightly less important, will be off take in the major markets (traditional and new). External factors may not be important unless there is a big drop in prices of other nuts or there is a big negative development – economic (in the US/EU) or political (in West Asia/North Africa), it said.

However, “we expect prices to move in current range in coming weeks – supply tightness will continue in the second quarter and uncertainty of price trend will continue until there is clear indication of flow of RCN from West Africa. Although upside seems to be limited, there is not much chance of any large decline in 2011 given the precarious supply – demand balance which will not ease until we have good crops in all origins together,” Mr Pankaj added.

Published on April 04, 2011

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