Monday, November 10, 2008

Weekly Cashews Update

NOV 8, 2008

Cashew market was quiet this week. Prices came down a few cents mainly due to lack of activity. At the lower levels, very limited business is being done by a few processors for nearbys e.g. W240 from 2.65 to 2.75, W320 from 2.35 to 2,.45 FOB. Large packers were asking few cents more for nearbys (and also forwards). Stray business was done at the higher levels

Very small quantities have been purchased in this week’s tenders in Tanzania, mainly by local processors. RCN traders and Indian processors are not showing interest as the price expected (over US$ 1000) is high – about 20/25 cents disparity with current kernel prices, Indonesia RCN prices have inched up a bit – current quotes are around US$ 900 C&F

Shipments from India & Vietnam in third quarter have been good but there are no reports of any excess inventories in USA / Europe (of course the tightness of first half is not there but supplies are not as comfortable as they were for a few weeks in Aug/Sep). Financial restraints are adding to the need to control inventories

Fundamentally, current prices should be comfortable for all segments as they are near the historical average (of course we have seen lower prices several times in the past for long periods but since then, processing costs have gone up and prices of all commodities have moved on to higher ranges. Also, purchasing power in general – except for the recent past – has been higher than it was when prices were below 2.00 dollars). So, one would expect prices to stabilise and maybe even move up a bit but the external factors like the financial turmoil, general downturn in major economies, currency volatility, lack of confidence & reduced position taking in all segments of the chain are having a “pull down” effect on demand & prices of almost everything (especially lower priority products) in the short & medium term

The potential for a significant move in prices in late 2008 / early 2009 is strong.. But it is difficult to predict which way things will go. If drop in usage in fourth quarter is not as bad as expected and if economic situation settles down, we could see a lot of buying interest in first quarter for deliveries second quarter onwards because everybody is working with thin inventories and forward cover. But if the problems we have seen in Sep/Oct continue into 2009 then buying interest will continue to be slow & for nearby positions only

Would appreciate your comments on the market situation, any special news or info and your views / expectation of demand & price trends in coming weeks / months

Pankaj N. Sampat

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