Monday, February 25, 2008

Weekly cashews update

Feb 23, 2008

Cashew market continues to be quiet with a slightly soft tone.. Medium & small packers have sold W240 around 3.05, W320 around 2.75, W450 around 2.55, SW around 2.45 FOB. Large packers are still asking for higher prices but no trades reported at higher levels. Prices in Indian domestic market for Splits & LWP have also eased a bit

USA roasters have bought some quantities in last few weeks for FH 2008 shipments. Europe industry seems to be well covered for most of 2008 but importers still have to buy to fulfill earlier low priced sales. Both seem to be content to pick up some quantities to cover immediate needs and wait for newcrop trends to be stabilized before making any large purchases. This seems to be prudent because any big demand now will mean higher RCN prices and consequently, inability for processors to reduce kernel prices (especially since other costs are also going up and dollar is lower compared to 2007)

Spot RCN prices in India and Vietnam were high due to limited arrivals. Prices should ease as arrivals pick up full flow in Vietnam in 2-4 weeks and India in 4-6 weeks. For the last few years, Indian RCN has been out of reach for exporting procesors (small quantities are bought to cater to niche markets - Rest of the crop is bought by regional processors who supply the domestic market)

Prices for WA RCN have opened with parity at current kernel prices but since there is not much forward demand at current levels, processors – those who bought Indonesia & East Africa at high prices and also those who have prior sales at lower levels – are unlikely to buy large quantities unless kernel demand picks up. If this does not happen, RCN prices may ease in Mar/Apr when arrivals in West Africa are at their peak (but prices will still be higher than last season). Reasonable RCN prices would be a good thing as too high prices will adversely affect all segments of the chain and impact medium & long term demand

Overall supply position seems to be comfortable (although there might be temporary tightness from time to time).. So, trend for 2008 will depend on developments on demand side… Supply side will have impact only if there is any big decline in any origin or if prices remain unreasonably high (this should be clear by end Mar/mid April at the latest).. Meantime, we will probably see some sharp movements in market during next weeks with crop news (and rumours) affecting RCN and kernel activity.

Would appreciate your comments on market situation, views on demand and market trend, news of crop prospects and any other info / news

Pankaj N. Sampat

Mumbai India

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