Weekly Cashew Update

May 31, 2008

The Cashew market is entering uncharted waters. There has not been much activity this week but undertone is very firm. Business has been done W240 around 3.45, W320 between 3.20 and 3.25, W450 around 3.00-3.05 FOB from India. Most of the business in W320 was with USA for shipments upto Sep but there were reoorts of some business for forwards as well. Stray business being done to off markets few cents higher.

Some processors in Vietnam have been selling few cents lower than India but business being done only for nearbys. Shipments of old re-negotiated contracts is reported to be slow. Buyers say they come to know price they have to pay for each lot only when it is actually shipped !

RCN prices have also moved up. Price for some goods shipped and under shipment are being re-negotiated. Some traders are re-selling afloat parcels at higher prices to other buyers. RCN still available in IVC are with lower yields. Situation in Guinea Bissau is very messy. Over 50,000mt have arrived in port but very small quantity has been shipped. It is reported that sellers are holding buyers to ransom, playing one against the other. Already, re-negotiated prices are about 300 dollars per mt (equiv to 60 cents per lb, kernel basis) higher than original prices and it is still not certain what prices will finally have to be paid to get the goods.

For the time being, buyers (RCN and kernels) have no option but to keep buying what they need to fulfill their delivery commitments. It will be several months before things come close to normal flow of supplies.

If - and only if - demand slows down significantly in coming weeks, we can expect some stability in prices this year; otherwise the firmness will continue till end of the year. And If current firmness continues till beginning of last quarter, RCN prices will be high in Brazil + Indonesia + East Africa leading to higher prices in first quarter 2009 as well.

We will be entering the third quarter - which is traditionally a busy period - with lot of uncertainty and consequent volatility. Next few months are going to be very difficult for all stakeholders – instability distorts trends and decision making becomes difficult

Would appreciate your comments on market situtation, views & forecast of demand & market trend and any other news / info AND opinion

Regards
Pankaj N. Sampat
Mumbai - India