Monday, December 06, 2010
Cashew market was steady in week 48. No change in prices – W240 between 4.10 and 4.15, W320 between 3.70 and 3.75, W450 & SW around 3.60 FOB. Some sales were made to USA, West Asia and off-markets. Europe was relatively quiet. Indian domestic market was quiet but prices are steady.
RCN market also is steady. More than 60% of the Tanzania crop has been auctioned and now quantities in the weekly auction are becoming smaller. By end of Dec/early Jan, almost everything would have been sold. Shipments from Mozambique are expected to start in Jan (if there are no changes in policy). Crop there seems to be good but traders are quoting high prices. Brazil arrivals continue to be slow – will things improve in coming weeks ??
During Oct/Nov, reasonable volume has been traded for shipment in first quarter 2011. If offtake is low – as many people in Europe & USA expect – they may be able to restrain buying in the first quarter as purchases already made will take them into second quarter with reasonable inventory. This may soften prices before the 2011 crops start. But if offtake is not as bad as feared, they will have to start buying in Feb to cover second quarter needs. Traditionally, first quarter production is lower and will be still lower in 2011 because of short 2010 crops. So, any significant buying in first quarter will result in a firm market as unsold quantities are low.
In the last few weeks, differential between large wholes and W320 has widened - this trend is likely to continue if the Brazil crop is as bad as feared. This could also lead to narrowing of differential between W320 and brokens (there has not been much change so far – except that prices for broken grades in India have gone up very high).
Since prices for all nuts – except maybe Almonds – are high, supply side factors (including rawmaterial & processing costs) will have more impact on cashew kernel prices. Processing costs in India (and I believe Brazil as well) are going up next year. On top of this, if RCN prices remain high, there is very little chance of a big decline in kernel prices although there may be periodic dips from to time. The only possibility for a substantial decline in cashew prices in 2011 is if offtake is severely affected (as many people fear) and all 2011 crops are good. There will be no clarity on these two aspects till middle of second quarter.
We expect reasonable activity during Dec as some buyers will probably want to cover additional volume for FH 2011 to avoid being caught with low cover. This will keep the market moving in the current range. First quarter of 2011 is going to be very crucial – kernel activity + news of crop prospects in that period will determine buying strategy of the processors and RCN traders and that will guide the kernel prices for 2011.
Overall, there is no change in market outlook – firmness for the near term, volatile in the short term, uncertain in the medium term and dark clouds in the long term.
Please let us know your comments on market situation, your views & forecast on demand + price trend, any info on demand & supply factors + any other news
Pankaj N. Sampat
Monday, November 29, 2010
WALNUT MARKET/CROP REPORT
It is believed that 95 percent of the 2010 crop has been harvested and delivered to the packers. The other 5 percent is either at the hullers or being held at grower facilities.
The quality of the 2010 crop is well above average with a very high percentage of light material. However, because the trees held a large portion of their second and third sets this year, the walnut sizes are coming in much smaller than normal.
It does not appear that the heavy rains during late harvest had much effect on the quality. Very few walnuts were caught on the ground as most growers rush their harvest in order to beat the rains. The material that did get caught in the rain was mostly assembled in edge-rows, thus, enabling the growers to complete their harvest in between storms. In any event, most post rain walnuts will not be utilized for the inshell market, but will be dispatched to the packers shelling operation.
There is no doubt that the 2010 crop will be larger than last year’s record crop (436,000 tons). The question is…by how much. In the state’s four major growing regions, the tonnage in the south seems to be well ahead of last year’s production. This also seems to be the case in some of the northern growing regions. However, the tonnage from the mid-valley areas seems to be only 8-10 percent ahead of last year’s numbers.
That being said, most industry leaders believe the crop will be closer to 480,000 tons rather than the 510,000 tons forecasted by NASS. However, the final outcome will be whether the Chandlers reach the number previously projected by NASS. My guess, they will not.
October shipments of 94,000 tons were less than the 100,000 tons I forecasted earlier; but still 7,000 tons ahead of last October’s shipments (87,000 tons). So, at the sake of going 0-for 2, I am projecting November shipments at 100,000 tons, 30,000 tons more than last November.
California Walnut Shipments Recap (000)
Month (Oct) 2009/10 Year to Date 2010/11 Year to Date Percent
In-shell (lbs.) 89,106 96,706 100,806 104,148 8.7%
Shelled (lbs.) 37,269 61,594 37,750 54,417 -11.7%
Total Tons 86,712 118,029 93,794 114,622 -2.9%
After some of the most active walnut industry bookings that I have ever experienced, the market now seems to be cooling off. China and Turkey are still booking, but not at previous rates. As an example, approximately 9 million pounds of inshell were shipped to China/Hong Kong at the end of October last year. This year, the shipments are at 27.5 million pound and I expect the November numbers will be similar.
As expected, Inshell Hartley’s to Europe have dropped off, but shelled bookings continue to be active. The Japan and Korea markets continue to book as well as the US domestic markets.
The market is still in a flux as most packers are still off the market. The major reason is that the record bookings in the past 6 weeks have extended their inventory position; and many must hold until they see their final tonnage from the growers.
It is my belief some packers will be coming back on the market shortly, but others will most likely remain off because of booking commitments and limited available inventories.
Limited trades have the Light Halves & Piece market in the $3.95 range and the Combo Halves and Pieces at $3.55 plus. Inshell Jumbo Hartley’s are trading around the $1.60 levels with Jumbo/Larges at $1.55.
Inshell Chandler Jumbo/Large are on both sides of $1.85 with Howard’s and Tulare’s 5-10 cents less.
I believe that the industry will ship more than 60 percent of the crop by the end of December and will have the entire 2010 crop committed shortly there after.
Please let me know if you have any questions or comments.
My well wishes for the up coming holidays and have a Happy Thanksgiving weekend.
There was limited activity in Cashew market in Week 47 but it continued to be firm – prices moved up few cents on some grades. Price range was 4.05 to 4.15 for W240, 3.70 to 3.75 for W320, around 3.60 for W450 & SW320, around 3.45 for SW360.
RCN market also continued to be firm. Quantity auctioned in Tanzania this week was lower and price was 2-3% higher. It is still not clear when exports from Mozambique will start. There is no improvement in situation in Brazil – arrivals are slow and price is high. Total crop figure will not be clear till Feb/Mar – current estimates range from 150 to 200,000mt.
In last month or so, most of the business has been for shipments upto Mar/Apr and some business has been done for 2nd quarter as well (at the same prices). There is reasonable buying interest for 2nd & 3rd quarter few cents below the 1st quarter prices but processors are not willing to discount because there is uncertainty about the 2011 crops and RCN prices.
Overall, USA & Europe contracting for next year shipments from origin (and delivery to retailers) has been much lower than normal. If the demand decline is not as big as feared, buyers will need to buy early in the year for 2nd quarter requirements and this will keep the prices in the current range. If the importers and retailers are able to manage with current cover for few weeks longer, the reduced buying in first quarter will result in a softer market which will have an impact on RCN prices too.
There is no change in the fundamental factors – supply will be tight until the Northern crops start in Mar/Apr. Even if the crops are normal (or good), opening prices are likely to be high due to an empty pipeline – RCN and kernels. In the meantime, if kernel prices come down from the current levels due to less buying activity in the first quarter processors (and RCN traders) might delay their buying and wait for prices to ease when arrivals pick up. But if the crop prospects are not good, they may have to review strategy even if kernel activity in the first quarter is slow.
To sum up, we can expect a firm market for next few weeks. Softening MAY happen in Feb but the decline will be small unless there is a big drop in kernel activity. A BIG drop in prices is possible only if ALL the 2011 crops are good – shortage in 2011 on top of a short 2010 will mean a very firm market all through 2011.
As there are too many uncertainties on both sides, all stakeholders will have to navigate carefully till Mar/Apr - by that time, demand trends will be clearer and we will have fair idea of 2011 crop prospects.
Would appreciate your comments on the current situation + views (and forecast) of trends + any other information / news for better understanding of prospects for coming months.
Pankaj N. Sampat
Sunday, November 21, 2010
The Cashew Market is leaving uncharted waters…. and seems to be entering the Bermuda triangle – nobody knows where market will end up.
Although market was relatively quiet in week 46, prices moved up few cents again on limited volume. Business was done for W240 from 3.95 to 4.05, W320 from 3.70 to 3.75, W450 around 3.50, SW320 around 3.50, SW360 around 3.35 FOB. In 3 weeks, prices have gone up by 15%. Prices for broken grades in Indian domestic market moved up sharply – in some cases, higher than the price for wholes !!
RCN prices also continued to climb up – Tanzania RCN has been traded around US$ 1800. There are reports of Mozambique RCN trading around 1300 C&F but since shipments are not likely before Jan, this cannot be taken as indication of the price at which shipments will actually take place (there is even talk of a ban or a delay in commencement of exports). Spot parcels of West African RCN (low quality) in India & Vietnam are being picked up at very high prices. Wage increases in Kerala / Tamil Nadu will add about 10 cents per lb to the proessing costs.
Short crop in Indonesia and a slow, short crop in Brazil coupled with low inventories in importing countries will result in a tight kernel supply position in first quarter 2011. And this will mean that pattern of limited buying for nearbys will continue.
Buyers seem to be reluctant to buy volume as they feel that the high pries will have big impact on usage in 2011. They are content to buy smaller volumes as & when needed – this means there is steady demand at all times. Extent of impact may not be as much as feared (especially because prices of all nuts are high). This could mean that some might be caught without enough product to meet the base demand (higher prices may mean lesser promotions or special offers).
Although it is difficult to say whether prices will continue to move up in coming weeks, we can certainly expect a firm market until there is some indication of the 2011 crop prospects. If 2011 crops are normal, market may soften after April (timing and extent of softness will depend on kernel buying in first quarter). If there is any problem with 2011 crops (on top of the 2010 shortage), prices could continue to move up in 2011 unless there is a big drop in usage.
It is extremely difficult to read the market and judge (or even guess) which way this precariously placed market will move. The steady rise over last 15-18 months with buying support at all levels leads one to believe that the trend will continue until supply improves. Historical highs make one fear that even a small development (fundamental or external) might result in a dramatic change in sentiment and provide the trigger for a trend change.
Would appreciate your comments on market situation + views on trend / prospects + any other information / news
Pankaj N. Sampat
Monday, November 15, 2010
Cashew market continued to climb up in Week 45. Business was done for W240 around 3.95, W320 around 3.65, W450 around 3.45 FOB with reports of some sales few cents higher as well. Volume traded was not large but there was good demand from all markets. Although most of the sales were for Nov-Jan shipments, there was reasonable interest for shipments upto Mar/Apr as well. Prices for broken grades in Indian domestic market jumped up by over 10% in the last ten days.
The RCN prices in Tanzania also moved up and they continue to be ahead of kernel parity (even with the rising kernel prices). The high RCN prices seem unsustainable but since there is limited RCN availability, it does not seem that prices will ease unless there is a withdrawal or reduction in kernel buying activity.
For the last three weeks, people have been expecting that there will be resistance to the higher prices and that buying interest would cool down. On the contrary, prices have been moving up every week by 2-3% and there is continued buying interest despite the rising prices. There has been short covering against delays plus some fresh buying to cover future requirements. Some market or the other has always been buying. This continued buying (volumes are not large as offers are limited) coupled with higher RCN prices due to limited availability + concerns about Brazil crop are providing support to the firm trend & rising prices. Brazil processors are unlikely to offer any significant quantities until their crop situation is clear – right now, it looks very bad but things could change in the next couple of months.
The current high price – about 50% higher than the average of last 18 months and the highest ever seen - should certainly have some impact on usage (especially the promotions). Extent of impact is uncertain (there seems to be very little impact in Asia). Lower kernel availability will also reduce the adverse impact of higher prices on total demand. Rawmaterial availability will be tight until second quarter 2011 – it will ease after May/Jun PROVIDED the North crops are good. Till then, reduction in demand will not have much impact on kernel prices which can soften only if RCN prices come down with good arrivals. Of course there should be a “pain” threshold for cashew prices (like everything else) but it is impossible to judge when that will be reached.
For the time being, attention is focussed on the supply side and everything points to a continued firmness – so far each wave has shown higher top. Until the supply situation changes or there is a clear indication of a large decline in demand, this trend is not likely to change. When the trend changes, the speed of price change will depend on the extent of the change in supply or demand (and equally important, the sentiment of all stakeholders).
To sum up, it is very difficult to predict which way things will move. People are working with short term positions and this makes things very dangerous – a small development can trigger a significant move.
In these difficult times, what are your comments on market situation and your views on prospects / trends ? Any special news or information ?
Pankaj N. Sampat
Monday, November 08, 2010
After a quiet beginning, week 44 saw further increase in cashew prices from middle of the week (in the last 2 weeks, prices have moved up by 6-7%). Business was done for W240 from 3.85 to 3.95, W320 from 3.45 to 3.55, W450 from 3.25 to 3.35 FOB. Most of the business was with USA but other markets also bought some quantities. Bulk of the sales were for Nov-Jan shipments but some business was done upto Mar/Apr. In the domestic market, prices for brokens have started moving up again.
Tanzania RCN prices moved up further to approx US$ 1625-1650 in this week’s auction. Indonesia RCN prices were steady around US$ 1500-1525 but yields are lower. Initial indications for Mozambique RCN are over US$ 1200 but shipments will not be possible before Jan. Brazil situation is unclear and worrying – arrivals are slow, RCN prices are high and processing is much lower than normal. If there is improvement, this will be known only in Jan.
For the next 2-3 months, we can expect market to remain firm because of Chinese demand for their New Year + Indian demand for the winter/marriage season + high RCN prices + limited replacement availability.
Traditionally, processing in India & Vietnam is low in first quarter – in 2011, this will be further reduced by lower availability of RCN from the 2010 crops. So a drop in demand in first quarter may not have large impact on the prices immediately. If the drop in demand extends into the second quarter and is accompanied by normal weather and good prospects for 2011 crop, we might see softer market and lower prices from the second quarter.
Asian markets are showing growth in usage despite the increase in prices (as Asian markets are a spot market, price movements are reflected in retail prices much faster than in the organized markets in the West). The impact of the higher prices in USA & EU is a big question mark. One view is that there could be a 20-25% decline in usage. If this is true (and this will be known only in second quarter), there might be a big drop in prices when the 2011 crops start and this will change sentiment of the market. Another view is that since the prices of other nuts are also high, decline may not be that much. If the decline is in single digits, we feel that there will not be any big decline in prices UNLESS the 2011 crops are very good. And if the trend of short period buying continues in first few months of 2011, the prices will remain at current levels and this will support RCN prices when 2011 crops start.
The long term outlook depends not only on the impact of higher prices on demand but also the state of the 2011 crops. Until there is some definite and clear indication on these two important factors, market will continue to be delicately poised reinforcing the need for caution. The pattern of buying (frequency and volume) + general food (especially nuts) price trends + financial market trends are other factors to be watched closely.
To sum up, we expect continued firmness for the short term (3 months) + volatility in the medium term (3-6 months) + uncertainty about the long term (6-12 months).
Would appreciate your comments on market situation, views on trend and prospects for coming weeks / month and any other news or information
Pankaj N. Sampat
Monday, November 01, 2010
WALNUT MARKET/CROP REPORT
Due to this years late harvest, it is believed the packers to date have only received about 75 percent of the crop. Of the 25 percent yet to be received, about 80 percent are Chandlers.
Most of the industry feels this year’s almost perfect growing season will produce a “bumper” crop, but not the 510,000 tons projected by The National Agriculture Statistical Service (NASS). Of the major varieties received so far, the Harley and Tulare tonnage appears to be about the same as last year, with the Serr’s and Howards ahead of last years numbers. The big question mark is the Chandlers as we still have about 20 percent of the tonnage yet to come in. Never-the-less, I don’t believe this will be enough to take the crop to NASS’s projection of 510,000 tons.
Most of the industry now believe the crop will be much closer to the Handlers “subjective” estimate of 473,000 tons rather than NASS’s 510,000 tons. Right now, and for a lack of a better number, I’m going with 480,000 tons.
As projected, the crop was at least 15 days later than normal which put a lot of pressure on the growers and hullers to handle the peak harvest period. In spite of this, they seem to have met the challenge as the packers received record tonnage during the first two weeks of October. However, we received up to 2 inches of rain earlier this week and another storm just passed through. This should not have an effect on the quality as the rains are expected to end today making it possible for the growers to get back in the field on Monday.
Also, as projected, the nut size on all varieties was much smaller than normal. This caused most packers to go to a lower percentage of larger sizes for their inshell packs. Thus, most of the Chandlers, Howards and Tulare’s were sold as 70/30 percent Jumbo/Large and the Hartley’s at 80/20 percentage Jumbo/Large. The size issue could cause some problems with some of the early bookings that called for Jumbo size packs.
The good news is the quality of this year’s crop has been excellent with very low defects. The meat yields were higher than normal (even the Harleys) and the percentage of light kernels were also higher than normal.
As expected, September numbers were down with shipments of only 20,828 tons (inshell equivalent) compared to 31,000 tons last year. The low shipments were caused from the late crop and lower than normal carry-over tonnage from the 2009 crop. However, I believe the October shipping numbers will be well over last year’s record of 87,000 tons.
California Walnut Shipments Recap (000)
Month (Sept) 2009/10 Year to Date 2010/11 Year to Date Percent
In-shell (lbs.) 7,601 7,601 3,342 3,342 -56.0%
Shelled (lbs.) 24,325 24,325 16,667 16,667 -31.5%
(In-shell eqv.) 31,317 31,317 20,828 20,828 -33.5%
The industries opening prices apparently stimulated the market as prices started strengthen right from the start. Because of the late harvest, Europe jumped on the early inshell varieties as well as the Harleys in order to make vessel dates.
In addition, China started booking inshell shelling stock (Chandler/Howards/Tulare’s) and anything else that fell off the trees. Turkey followed with heavy bookings on the same shelling varieties. As of this date, trades into both of these markets continue to remain strong, thus creating a temporary inventory shortage, causing most packers to pull off the market. In addition, the packers are concerned about over booking, especially with the crop coming up shorter than expected.
This has created some confusion and disappointment in the domestic market as many buyers felt that pricing would weaken because of the record 510,000 crop. To date, this has not happen and in my opinion, the market will continue to strengthen. I base this assumption on the crop being smaller than the forecast and the extra strong demand coming from the China market.
In addition, two of the largest packers recently opened in Japan at $3.45 for Light Halves and Pieces; and at least one of them withdrew from the market last week. Also, the availability of Hartley’s seem to be getting tight as buyers are now jumping on the smaller sizes in order to meet their commitments.
I am always reluctant to put out current pricing, but here it is anyway:
Light Halves & Pieces $3.45 (opening $2.75)
Jumbo/Large Chandler In-shell $1.70 (opening $1.35)
Jumbo Hartley’s $1.48 (opening $1.25)
Please let me know if you have any questions.
Monday, October 25, 2010
There was reasonable activity in the Cashew market in week 42. The lower offers were taken out of the market early on. By end of the week, prices from medium packers had moved up to 3.25 FOB for W320 (large packers were able to sell few cents higher). There were some trades in W240 around 3.60 and W450 around 3.10 FOB. Most of the sales were to US & Europe importers for Oct-Dec (some for Jan-Mar). India & China buyers were quiet but they are expected to start buying again in Nov.
RCN market continues to be firm. West African RCN in India traded in the range of 1200 to 1350 dollars (depending on quality). Indonesia RCN is steady around 1500 despite lower quality. Tanzania continued to get surprisingly high prices in their auctions. Brazil reports of crop shortage range from 15% to 30%. This means that almost all origins have had short crops in 2010.
Last fortnight’s lower offers for 2011 deliveries from the importers did not induce any significant business. If RCN market continues to be firm, we feel that the lower offers will dry up soon. We expect some roasters – in USA as well as Europe – will start to buy some quantities if they see firmness continuing for next few weeks. Most of them are very lightly covered for 2011 and may not be able to postpone buying for too long (they will soon have to cover at least the first quarter, if not the first half).
Most buyers have been restricting volume and period of buying because of the wide difference between prices from small / medium processors for nearbys and large processors for forwards. This has meant that they need to buy something every few weeks and each time after a dip, prices have moved up a few cents. So far market has not pierced the 2008 ceiling but it cannot be said with certainty that this will not happen sometime during the year.
Outlook for mid / late 2011 continues to be cloudy – demand trends are uncertain and it is impossible to judge what 2011 crops will be. So, it would be unreasonable to predict long term price movement. But in view of supply tightness (which is likely to continue till Apr/May 2011), it is more or less certain that prices will continue to be firm for rest of 2010 (and even early 2011). There is some chance of a further increase in prices if kernel activity picks up and / or RCN prices continue to be firm.
If there is a big drop in usage in FH 2011 coupled with good or normal crops from Mar/Apr 2011, we could see prices softening. Absence of one or both could mean the opposite. In the meantime, it is reasonable to expect that prices will continue to be firm and will be determined by spot / nearby demand (or interest to sell) till there is a significant change (or a reasonable expectation of a change) in one or both fundamental factors. This cannot happen before Mar. A change in sentiment could also prove to be the tipping point. External factors – economic news, currency movements, etc – also need to be watched.
For the time being, there is no reason to change the earlier recommendation i.e. everyone in the chain (RCN traders - processors – traders – roasters) should cover some portion of their need (to buy or sell) for a few months to avoid being caught on the wrong foot as any change in trend could be quite sharp.
Would be grateful for your comments on market situation, views & forecast on prospects for demand + price trend and any other news or information for better understanding of the market.
Pankaj N. Sampat
Monday, October 18, 2010
By Barry Shlachter
Pecan prices are expected to approach record levels this fall, thanks to a slightly off year in production -- down an estimated 20 million pounds or 7 percent from 2009 -- and gargantuan demand from China.
The Chinese appetite for pecans exploded in 2007 when rising walnut prices made them a relative bargain, said Joe Peña, an agricultural economist with the Texas Agri-Life Extension Service. U.S. shipments to the world's most populous nation more than doubled to 25 million pounds, up from 9.2 million the year before.
A decade ago, there was hardly an American pecan on the Chinese market. Last year, U.S. shipments to China soared to 88.6 million pounds, up from 44 million pounds in 2008.
Despite higher prices, the increasingly affluent Chinese middle class still considers the imported nut a bargain compared with a native hickory nut, said Cary Millstein, a U.S.-based pecan buyer for a Hong Kong-based importer, the Welming Group.
And that's music to the ears of American growers, who supply a whopping 77 percent of Chinese imports, with Mexico and Australia splitting the rest.
"It's not a one-time deal," insists grower Danny Davis, a co-owner of the Texas Pecan Co., based in the Central Texas town of Comanche. "This is going to be a lasting market for us."
Peña says that the U.S. pecan market remains strongly under the influence of five large shelling companies but that Chinese demand has kept a steady upward pressure on prices.
The effect will be felt in the aisles of American supermarkets, translating into increasingly higher prices for bags of whole pecans and pieces this year, he predicted. Already, retail pecan prices at one major chain are up 15 percent.
Collin Street Bakery in Corsicana, which sells $35 million worth of pecan-filled cakes a year, said its mail-order prices were set in August before prices and supply were known. As a result, it will absorb the higher cost, spokesman Hayden Crawford said. The pain is mitigated by the fact that the bakery owns the nation's biggest pecan shelling company nearby, he added.
Growers have gotten initial bids of $4 to $4.50 a pound for good quality, shelled pecans for the high-end gift pack market, Peña said. (Depending on the size of the nut "meat," in-shell pecan prices can run 40 to 65 percent of the shelled price.)
The Chinese don't bake with what they call mei guo shan he tao -- literally, "American mountain peach pit." And they don't eat them in their natural state or candy them.
Instead, they process the pecan as they do a native hickory nut: cracked slightly by hand by row upon row of workers, then marinated in vats of flavored brines, which vary by region. They are dried, packed in cellophane bags and sold as a healthy snack food, Millstein said.
Many are purchased directly from Texas, New Mexico or Georgia growers by Chinese importers, who can scoop up an orchard's entire crop.
That doesn't always make them friends in the industry.
"The first time they'll buy through an American broker," said Wade Railsback of Granbury Pecan Co., himself a broker. "The next year, they'll go around them and buy from the grower, cutting out the middleman."
The commerce has gotten so rich that the big shellers, hurt by the higher prices, are looking to get into the China trade themselves, industry sources said.
They may have to wait in line.
"Everyone with a fistful of dollars is becoming an importer," Millstein said, referring to widening Chinese commercial interest as he drove from Alabama to Texas to look over the harvest. "The Chinese will speculate on a hot crop. A lot of speculators are coming into the market to compete with the real big suppliers."
U.S. growers aren't worried about China busting their windfall by growing its own pecans and flooding world markets, as it has with garlic and tilapia.
Larry Grauke, a USDA research horticulturist who has visited his Chinese counterparts, is betting against competition from Asia anytime soon.
The Chinese have known about pecans since American missionaries brought over some trees more than a century ago. But instead of using rich bottom soil like U.S. growers, the Chinese have tried -- with little apparent success -- to grow pecan trees on hillsides as they do their native hickory, Grauke said.
"Climatic, soil, pest and cultural conditions are all different," he added. "I don't know of any commercial plantings that are bearing."
Barry Shlachter, 817-390-7718
The walnut harvest is now well underway throughout the state. Initial receipts indicate that this will be another record crop but it remains to be seen if the final objective estimate of 510,000 tons will be reached. Using data from the southern counties, the trends for the major varieties are currently as follows:
Ashley down 7.8%
Chandler up 6.0%
Hartley up 31.0%
Payne up 1.7%
Serr up 51.4%
Tulare down 18.7%
Vina up 9.2%
Other up 9.2%
For Chandler and Tulare, the number of orchards that have completed harvest is quite small and those numbers may fluctuate greatly in the coming weeks. Still, given these adjustments to last season’s production and adding an extra 5,000 tons to account for new tonnage, we are looking at 480,000 tons plus whatever adjustment needed for Howard variety, of which I have no data. It is still early and we may make the 510,000 crop estimate but at the moment, data from the south seems to indicate that we may fall slightly short of that number.
Kernel color is fabulous this season and meat yields have climbed back up from last season’s poor kernel yields. If one were to assume 2 percentage points more on edible yields across the board, the additional kernels would be the equivalent of roughly an additional 21,000 tons. Size on Chandler walnuts is down considerably with early deliveries averaging 49.1% jumbo – well short of the 54% indicated on the objective estimate. Typically, the younger trees tend to harvest later with higher percentages of jumbo and so while it is hopeful the jumbo percentage inches up over the harvest the reality is that we have a very poor jumbo percentage this season on Chandler. Early deliveries of Hartley (60.6% jumbo) and Tulare (80.0%) varieties show reduced jumbo percentages as well although the Tulare size seems to be a manageable issue.
Harvest started 10 days late in the south and that trend seems to have been constant throughout the state. The lateness of the new crop coupled with the relatively low carry-in has reduced the opportunity for sales in September to set a very low number for the first month of reported shipments.
September shipments were off 33.5% from last season’s record setting number. I expect October’s shipment number to also be off from last October’s due to the following reasons:
5414 East Floral Avenue, Selma, CA 93662 Ph. (559) 834-1555 Fax (559) 834-1759
1. The lateness of the crop is going to set the initial shipment date for each major inshell variety back substantially.
2. The Chandler variety lateness will also affect kernel shipments although to a lesser degree as customers who prefer Chandler walnuts are able to substitute for earlier varieties due primarily to the very good color on many early deliveries
3. The anticipated small size of inshell and especially Chandler will slow down the rate at which loads of inshell can be processed and packed, reducing the overall throughput at the processors.
4. Cargo ships are mostly booked up at this point and if there were any extra loads that could be made and offered at the last minute, many of them might have to be rolled into November.
Reason #3 above is one of the more important issues to look at. Back in 2005, the industry had a record crop of 355,000 tons. This season’s estimate of 510,000 tons is a 44% increase in industry production in just 5 years. There has not been a corresponding increase in packer capacity over that same time period. Granted, there have been some new processors over that time period and some existing processors have upgraded their plants, but not to the tune of 155,000 tons of additional product. Much of the capacity increase has been in packing inshell nuts and running inshell lines more hours per day and a longer inshell season.
Kernel availability has been affected by this bottleneck and offers for kernels for prompt shipping are very difficult to come by. This shortage can be solved by one of two ways – queuing or raising prices for early shipments. Queuing is preferred by people who tend to be first in line and upsets those who are not given priority and frustration can already be seen from brokers and customers who are always shopping their volume out. The option to make a few extra dollars can be tempting by offering a load or two at a premium, but care must be taken to avoid pushing the market up for the short term and setting up a falling market that ends up cutting overall consumption.
Export demand into China, both Hong Kong and mainland China, has been very strong. Turkey, the second largest market for inshell walnuts, continues to show strength in their markets and old crop inshell is gone and Ramadan consumption has left the country without excessive inventories. Korea, the only major export destination that had large forward inventories seems to have worked through their long supplies and demand for new crop kernels is starting to increase. Inventories in Europe are low, but shipments of traditional inshell varieties into Europe will run into difficulties as those are traditionally a Christmas item and the shipping window for those is now compressed. Japan’s demand appears to be consistent with last season and for the moment the favorable exchange rate vs. weak US Dollar is countering resistance to the high prices.
Prices have firmed approximately $0.15 on inshell cracking varieties, $0.10 on Hartley inshell since opening prices and kernels have jumped $0.25-0.30/lb. Historically, market prices have been sustainable at levels even higher than the current spot levels, but should prices continue to increase there would be a chance of movement slowing in certain sectors, primarily domestic consumption or other countries where the higher prices are not being offset by a falling dollar relative to their local currency.
Poindexter Nut Company
Cashew market was extremely quiet in Week 41 – October has been much quieter than normal. Some processors sold W320 around 3.20, W450 around 3.10, SW around 3.00 FOB. There was fair interest for W320 around 3.20 FOB for Oct-Dec shipments but very few sellers. Large processors in India & Vietnam offered (and sold) some volume in the last two weeks – W240 around 3.60 and W320 around 3.30 FOB. Despite the relative quietness, large processors are not inclined to reduce prices to make sales.
After a month of good activity, Indian domestic market was quiet and prices drifted a little lower. The next big round of domestic activity for winter & marriage season is expected from mid Nov (after the Diwali festival). Vietnam processors expect good activity from their equivalent of domestic market (China) during Oct/Nov.
No fresh news on supply side. If arrivals in Indonesia do not improve in next 4-6 weeks, fears of a big shortage (quantity and quality) will be proved right. Brazil continues to be a question mark – some people say crop may be around 250,000mt. It is to be seen whether late start to the crop means that big a shortage or whether crop extends into Feb/Mar compared to the normal end of collection in Jan. Very high prices (about 15% higher than kernel parity) are being paid in Tanzania auctions. It seems that prices will not ease till the local processors have covered their requirement. Too early to talk about Mozambique as shipments unlikely before Jan.
On the back of some low priced purchases from few processors for Oct-Dec and probably with a view to getting some more sales on the books for 2011 deliveries, some importers have reduced their offers for FH 2011 – they are offering W320 around 3.35 C&F. This has not induced any significant buying - roasters seem reluctant to buy until they have an idea of retail offtake trends. At the same time, the lower offers from importers are not spooking origins to reduce their prices – processors are concerned about RCN prices (tightness of supply may not allow prices to come down even if kernel demand is slow).
It is difficult to estimate demand trend – there are some who feel that the high prices will mean a big decline in usage in EU & USA. Others feel that the impact may not be much since prices of almost all nuts are high. Although promotions will be for products which are more abundantly available, the base demand will certainly be there – all that is available will be consumed. Until supply improves significantly, price will be determined by periodic bursts of buying & selling (volatile in the current range).
If the RCN prices do not come down in 2010 and if the Brazil crop is as bad as feared, kernel prices will continue to be firm till mid 2011 (unless there is a big decline in usage in first quarter 2011 – a single digit decline will not have much impact). Even in the second half of 2011, kernel prices will soften only if Northern crops are very good and RCN prices decline significantly.
Like the last six months, the next few months will continue to be difficult – spot / nearby demand will have significant impact on price and this will determine forward quotes as well (unless there is a reasonable cushion, processors will be reluctant to sell). Till supply increases or sentiment changes, everyone in the chain (processors – traders – roasters) will have to adjust their strategies to have some cover for a few months to avoid being caught on the wrong foot.
Kindly let us know your comments on market situation, views on future trend + prospects and any other information + news
Pankaj N. Sampat
It takes a special breed to be a grower. What with the fluctuations in f.o.b.s, paying sky-high prices for fertilizers and crop-protection chemicals and an often uncertain labor pool, gray hair can come early in life.
Then there’s fickle Mother Nature.
For most grower-shippers, her impact often dictates whether a farmer will be around for another year.
A too-short dormancy period, lack of rain, a freeze — all of them can spell disaster before the season begins.
It is the end of the season, however, that concerns California raisin growers.
The first week or so of October was a rollercoaster for them. With about 15% of the crop still drying on paper trays in the vineyards, the month was just two days old when rain hit the central San Joaquin Valley, the epicenter of this country’s raisin production.
Temperatures stayed low, but wind helped the drying.
The picture brightened considerably by mid-month. Growers and packers agreed on a near-record price for the dried grapes — right at $1,500 a ton. That’s the highest price in a couple of decades.
As recently as 2002, the per-ton price paid to growers was about $750.
The reserve from last season, another ingredient in the raisin price formula, is at its lowest level in 30 years.
Then there’s the production dip in other raisin-growing countries.
Expect higher prices
The fallout for retail, foodservice and their consumers will be higher prices.
The reason is that supply and demand have equalized, said Gary Schulz, president of the Raisin Administrative Committee, Fresno.
After years of overproduction, thousands of acres of California vineyards have been pulled and replaced by other commodities — or housing developments — or converted to table grapes.
The committee’s 2010 forecast is 293,000 tons, down a big chunk from the 400,000 produced eight years ago.
Exports a factorHelping the demand side of the scale is foreign buyers who are particularly fond of California raisins.
Exports now gobble up nearly half of the average year’s volume.
Domestic buyers will have to open the purse strings a bit to stay in the bidding.
At last check, about 80,000 tons of 2009 raisins were still in reserve.
Placing orders well before the holiday crush could mean capitalizing on last year’s lower prices.
The higher prices of the 2010 crop may very well stick around — at least into 2012.
The administrative committee, which determines what percentage of the crop will be released for immediate sale and how much will be held in reserve, has concluded all of the 2010 crop will go on the market; no reserve
Monday, October 04, 2010
Cashew Market continued to be quiet in Week 39 – there has been very little export activity from India for more than six weeks now. Some processors in Vietnam have been selling at lower levels e.g. W240 around 3.50 and W320 around 3.25-3.30 FOB but volume has been limited. The large processors in Vietnam and India are at least 10 cents higher and they are able to make some sales at the higher levels. Brazil processors are very quiet. In the last few days, there have been reports of some importers offering at lower levels for 2011 deliveries but origins are not prepared to follow. Indian domestic demand and prices continue to be very firm and this situation is likely to continue atleast till end of the year.
Nothing new to report on RCN front. Spot RCN prices continue to be firm. No clarity about Indonesia & Brazil crop. No movement in East Africa. Vietnam and India processors access to new RCN is limited to max 175,000mt (including small quantities from 2010 West Africa crop) until the Northern crops start in March 2011.
USA & EU buyers seem to be content to buy limited quantities “as needed”. They are reluctant to take forward positions due to uncertainty of demand trend – especially because prices are on the higher side of the long term range. Processors also are comfortable with regular sales of small quantities as they have seen prices moving up with each round of buying (and at all times, there has been some market which has been active). At some stage, trend will change and prices could come down but this is unlikely to happen in short or medium term.
Tipping point will be when there is a big improvement in supply or a big drop in usage. Impact of high prices on usage will not be known until Mar/Apr 2011. Supply cannot increase till May/Jun 2011. At this time, it is impossible to predict either. Trend of regular activity for spot / nearbys will keep the market volatile. Small events can create large price movements. Wide range of prices at any given time will become the norm.
Until there is some indication of demand trend for 2011 or easing of supply tightness, market can be expected to hover around current range.
Would appreciate your comments on market situation, views & forecast of trend in coming weeks + months and any other info + news
Pankaj N. Sampat
Monday, September 27, 2010
In Week 38, there was hardly any export activity from India in the Cashew Market as the domestic demand is strong & prices for most grades are much higher than international market. Stray business was done for W240 around 3.60 and W320 around 3.35 FOB. Some processors in Vietnam sold at lower levels – W240 around 3.50 and W320 around 3.25 FOB but volume was limited (large processors not offering or asking same prices as India). Brazil is very quiet. Trade is selling some quantities at few cents below quotes from large processors.
Recent RCN news is not encouraging – Indonesia & Brazil are reporting that weather problems will affect crop size & quality. Clear picture will not be available for some time but the concern will add to uncertainty. No adverse news from East Africa but uncertainty about movement continues. Spot RCN prices in India & Vietnam continue to be high – limited volumes being traded. Processors will be reluctant to buy big volumes unless kernel activity picks up but small purchases by large number of players might lend support to the market.
Despite limited activity with major markets in last six weeks, there is no pressure on processors to reduce prices because (a) some volume is being traded to one market or the other (b) Indian domestic demand has been strong for last 2-3 weeks (c) there is little replacement RCN available till next North crops which will start in Mar 2011.
There is little chance of reduction in RCN prices in 2010 unless there is a big decline in kernel activity in last quarter. Unless RCN prices come down, processors will not be able to reduce their kernel offers. So, we can reasonably expect market to be firm till the end of the year – beyond that, trend of kernel buying activity will determine price movement in first quarter and that will impact RCN prices when 2011 crops start in second quarter.
Outlook for 2011 is very unpredictable. There is concern about impact of high prices on retail offtake. So, retailers and roasters may reduce volume and period of cover. This will mean regular small buying by some market or the other leading higher volatility within a range. Breakout from the range will happen only when there is a substantial shift in fundamentals i.e. either a big increase in supply or a big decline in usage.
In the last few years, there has been a power shift on both sides of the cashew market – supply and demand. India is no longer the largest supplier to the world market – that position has been taken by Vietnam for kernels and West Africa for RCN. On the demand side, USA & EU continue to be large buyers but they have been overtaken by Asia which is now the largest consuming region (India is the largest consuming country). This has altered the market dynamics – relative power of each region to determine market trend has changed. It is now much more a spot & nearby market – activity in many more origins and markets influence the price than in the past. Stakeholders will have to change their strategies to succeed in this changed environment.
Pankaj N. Sampat
Monday, September 20, 2010
In Week 37, there was hardly any change in cashew prices - despite relative quietness for more than a month (although some business is being done every week). Some business was done from Vietnam for W240 from 3.45 to 3.50 and W320 from 3.25 to 3.30 FOB. Prices from India were 10 cents higher – some business was done to buyers who are prepared to pay few cents higher to specific processors for quality and performance. Large processors from Vietnam were also quoting same levels as India. Prices in domestic market in India for almost all grades is higher than international market – so there is no pressure on Indian processors to sell at lower levels (at least for the time being).
There is no adverse news about crop prospects in East Africa but there is no certainty when shipments will start. There are mixed reports about Indonesia & Brazil crops. RCN traders are expecting prices for East Africa & Indonesia RCN to be higher than last season as kernel prices are higher but unless kernel activity (especially for 2011 deliveries) picks up in the next few weeks, processors will be reluctant to take on positions at higher levels. A realistic estimate of Southern crops and price trend will not be available till late Oct/early Nov. Meantime, spot market for West Africa RCN in India and Vietnam continues to be firm.
There is nothing on the horizon to change outlook for market – it continues to be hazy !!
There is no pressure on processors to reduce prices as they have limited unsold quantities from RCN bought in 2010 and they do not know what prices they will have to pay for the limited RCN available till the next Northern crops beginning in March 2011.
Uncertainty about demand prospects and concern about impact of high prices makes buyers reluctant to buy forward positions at higher levels. In first half 2010, growth has been about 6-7% in USA and about 3-5% in the Europe (other markets have grown faster). In most markets (except Asia), the higher prices of last few months have not yet been passed on to the retail level.
Traditional Asian demand which will continue into Jan/Feb and the lower processing in first quarter should keep the market firm for the next few months. During this period, kernel prices will soften only if RCN prices come down in Oct/Nov and this will happen only if there is very little kernel business done for 2011 deliveries in the next two months.
If there is a doube digit decline in usage in USA & EU in first few months of 2011, we can expect lower kernel prices when the Northern crops are harvested after Mar 2011 but till then, there does not seem to be much chance of a major decline in prices. If the usage decline is in single digits, the decline prices may not be much as even a steady Asian demand will support the market if prices come down a bit (unless the Northern crops are much bigger than 2010).
If there are no big surprises on demand or supply side, we continue to expect a firm market for next few months, a volatile market in the first quarter with a big question mark for middle & second half of 2011.
Would appreciate your comments on market situation, views on market prospects and any info / news
Pankaj N. Sampat
Monday, September 13, 2010
Cashew market continued to be quiet in Week 36 – there was good buying interest from USA & Europe at slightly lower levels and some processors in Vietnam did sell W240 around 3.50 and W320 around 3.30 FOB. But in general, most processors were 5-10 cents higher – levels traded were from 3.55 to 3.60 FOB for W240 and 3.35 to 3.40 FOB for W320. Splits were traded (and bid) around 2.85 FOB but offers were scarce. Prices for Splits & Pieces in Indian domestic market continue to be about 10% above international prices.
Spot RCN market in India & Vietnam continue to be firm as availability is limited. Indonesia RCN prices are very high and unworkable even with current high kernel prices. Processors expect some relief when arrivals pick up in Oct. Tanzania / Mozambique arrivals will start in Oct but shipments will not start till Nov (Tanzania) and Jan (Mozambique). If the prices open too high, processors may be reluctant to participate in view of uncertainty of kernel demand for 2011. Reports from Brazil are mixed and a realistic estimate will not be possible till Nov. Processors there expect RCN prices to ease in Oct but unless they see this happening, they do not seem to be interested to make sales even at current levels.
Kernel market is delicately poised. The upward movement has stalled and activity is slow. BUT, despite the limited activity at higher levels, processors do not seem to be under pressure to reduce prices to make sales because replacement RCN is not available (and definitely not at lower prices). Unless Southern RCN prices come to lower (reasonable levels), processors will be content to sell limited volumes and await further signals about market trend. Buyers are reluctant to buy large volumes for forward positions at these levels as there is some concern about impact of higher prices on 2011 usage. When higher prices are reflected on retail packs, it will certainly have some impact on usage but extent of impact is a question mark. If there are no other negatives, impact may be too much.
For the last couple of years, processing in Asia in first quarter has been lower than other quarters due to lower RCN availability. This situation is likely to continue in 2011 since Southern Crops were short in 2010 and most processors will have less RCN to process after Dec. Coupled with the trend of “hand to mouth” buying, this reduced availability will keep prices firm and provide a floor to the market. Easing (and even slight softening) of prices will happen only when usage is substantially impacted (for example a 5 to 10% decline in usage in USA & EU will not have much impact) or if 2011 crops are significantly higher (atleast 10% higher than 2010 to come to normal level).
It is difficult to judge how things will develop in the long term (middle and second half 2011) but it definitely seems it will remain firm in the short term (rest of 2010) and volatile in the medium term (first quarter of 2011).
Pankaj N. Sampat
Tuesday, September 07, 2010
SEP 4, 2010
There was very little activity in the Cashew market in Week 35. Some business was done forW240 around 3.55 and W320 around 3.30 FOB (some buyers / markets paid few cents higher for good quality, guaranteed supplies). Splits were traded around 2.80 FOB. There was steady domestic demand in India for large wholes & brokens – prices were higher than international market.
From Vietnam also, activity was limited but some processors were selling few cents below India. Brazil continues to be quiet – apparently they do not have much to offer from old crop and do not seem to in hurry to sell from the new crop as arrivals are slow – clear picture of crop will be available by Nov.
Spot RCN market in India is firm – small processors (catering to seasonal domestic demand) are paying high prices for small lots of ready goods. Indonesia RCN is being offered around 1500 dollars but buying interest is limited as there is a big disparity with kernel prices. There is a feeling that prices may soften end Sep/early Oct when arrivals pick up (unless kernel prices move up in the meantime). In East Africa, everything looks okay on weather front but it is too early to talk about crop prospects, price levels, shipment commencement.
Kernel outlook for next few weeks seems to be firm. Limited replacement RCN availability + steady demand from one market or the other will mean prices will continue to be high. Processors will be content to sell small volumes at a time. Similarly, buyers will be inclined to buy “as needed” because at current levels (a) they will make losses if they are covering short positions (b) risk appetite for going long is limited in view of uncertainty about future demand.
Long term outlook continues to be cloudy. Inventories seem to be low across the chain due to short crops and hand-to-mouth buying. As discussed earlier, tightness will ease only if supplies increase substantially (this can happen only in mid 2011) or usage / demand falls dramatically (nobody knows when – and if – this will happen). Apart from price of cashews, other factors like prices of other nuts + consumer spending on snacks (and snack nuts in particular) + general economic situation will have a significant impact on usage/demand of cashews. High prices may not necessarily mean big drop in usage if other factors are positive.
This situation will make long term contracting difficult – for buyers because they do want to be caught with long positions at high levels which they cannot move if demand falls and for processors because they do not want to have large forward commitments even at current high levels because the next big RCN procurement possibility will only be in second quarter 2011.
So, although one can have a legitimate doubt about sustainability of the current price levels for the long term, there is very little reason to expect a change in the current range and firm trend in the medium term.
I would appreciate your comments on market situation + views on demand & market trend in coming weeks / months + any information & news
Pankaj N. Sampat
Monday, August 30, 2010
Cashew market was very quiet in Week 34 but continued to be firm. Some business was done for W240 around 3.50 and W320 around 3.30 FOB. There was no activity with main markets – probably because most Indian processors were away for Onam holidays this week.
No fresh news expected in the RCN market in the near future – spot market likely to remain firm due to limited replacement possibilities. Tanzania shipments likely to be delayed due to increased procurement by local processors. Time gap between RCN buying by India / Vietnam processors is increasing.
There has been a fair amount of activity in the kernel market during Aug and more is expected in Sep/Oct. Generally, business in this period is for long spreads but this year it is uncertain what the trend will be. High prices might keep buyers away from making long term commitments. Also, processors will be reluctant to make big forward sales unless they get a “risk cushion” because there is nothing on the horizon to signal a change in the firm, upward trend.
To answer the question whether the high prices can be sustained (or when the trend will change), we can look at the medium term (past and future).
The price rise in June 2008 (when W320 crossed 3.50) was sudden (in couple of weeks) and the main reason was defaults of large volumes contracted at lower levels. The current price rise (to current level of 3.30 with some upside still left) has been gradual (over a period of more than 15 months) and supported by steady spot / nearby demand (and higher RCN costs).
The price drop in Oct 2008 was caused due to external factor – financial crisis leading to cash crunch, downsizing of inventories & operations in major importing countries. Although current economic situation is not “great”, it is nowhere near the depressing 2008 (although nobody can predict what surprises the financial markets can throw). Excluding this, the only reasons for a price decline (or change in trend) could be (a) big drop in usage or (b) big increase in availability.
A big increase in availability can happen only if Northern crops are good. (but this will be known only in second quarter of 2011). If the crops are good and RCN prices decline, we could see kernel easing to 3.00 level (maybe lower if the kernel prices decline from current levels before the crops start).
A big drop in usage is possible if retailers and large brands move away from cashews due to the high prices. If this move happens end 2010 or early 2011, prices will start drifting lower and could go below the 3.00 level (maybe lower if the reduced usage continues into mid 2011 when the large Northern crops are being collected). If usage does not reduce in FH 2011, prices will continue to be firm.
Since both possibilities are six months away, market can be expected to be firm in the short term with spot / nearby demand lending support at current level. Any large buying in Sep/Oct will lead to another jump in prices. Quiet period in Sep/Oct would mean prices drifting to lower end of the recent range. Overall, uncertain times ahead !!
Pankaj N. Sampat
Monday, August 23, 2010
I have seen some quotes at the $3.90/lb for R/S US X #1 Pistachios done two weeks ago.
I had another quote at $4.00/lb for R/S US X#1 last week.
It appears that some rumors find this crop to be the on year with estimated pounds around 400 million so bigger than last years, Iran is coming in also with a 400,000,000 pounds. Together you got 800,000,000 pounds usage is about
it's really does not look a like they have enough to finish a the year.
Paramount claims to be booking lots of business both domestic and export
Cashew market was quiet in Week 33 but undertone continued to be firm – price range moved up a few cents i.e. W240 between 3.40 to 3.45, W320 between 3.25 to 3.30, W450 was 3.10, SW320 around 3.10 FOB. As we have seen in the last few weeks, some processors sold below this range and some were able to sell few cents higher - the difference between lowest and highest price continued to widen.
RCN market is steady – afloat parcels being traded between 950 to 1000 for IVC and around 1200 for Guinea Bissau. Indonesia new crop being quoted around 1500 C&F with reports of bad weather in some areas. No significant news from East Africa or Brazil.
In last few weeks, there is steady demand from “off markets” which buy spot / nearbys and pay few cents more to regular suppliers for quality and reliability. Traders in USA & EU have also been buying regularly – either to cover short positions or to have something on books to be able to offer when endusers come in to buy. Market seems to be comfortable with this trend – at least for the time being. Forward cover / sale position is limited and as prices continue to climb, the risks are becoming bigger (for everyone in the chain).
Processors expect good demand in the next six weeks and are prepared to wait - each round of buying (so far) has seen some increase in the price range. They are not in hurry to sell because there is no replacement RCN to be bought before Nov (except for limited quantity of high priced Indonesian in Sep/Oct). So, general feeling is that there is room for some price increase in this period.
With the prices being high, the question uppermost in all minds is whether these levels can be sustained next year. The feeling is that if prices are at / higher than current levels at the end of 2010, then the 2011 crop RCN prices will open high and there will be little chance of a significant price decline for quite some time, although there will be periodic dips. We can expect 2011 RCN prices to open at lower levels only if there is a significant decline in kernel prices by end 2010/early 2011.
Prices of many food commodities are higher than recent historical average. As far as nuts are concerned, good demand growth for most nuts and short supply in some nuts is likely to keep prices high (with some dips depending on growers/processors need to sell during periods of low buying interest). Unpredictable external factors can throw surprises but no changes are expected in the fundamental factors for cashews in the near future to change the trend. At some stage, the trend will change (either on fundamentals or sentiment) and we will see realignment of price range but it is difficult to judge when and at what level this will happen.
Comments on market situation + views / forecast of trend for coming weeks + any interesting info or news would be appreciated.
Pankaj N. Sampat
Thursday, August 12, 2010
WALNUT MARKET/CROP REPORT
On July 27th the California Walnut Handler Coalition set the “subjective” walnut crop estimate at 473,000 tons, up 8% from last years record crop of 436,000 tons. The official NASS “objective” crop estimated will be out on September 3rd.
The Handlers forecasted the Chandler’s at 186,000 tons, up 12% and Hartley’s at 60,000 tons, down 3%. Tulare’s are up 9% (55,000 tons) and Howards estimated at 53,000 tons, up 10%.
Because of the large crop (projected), many growers/packers feel undersize may be an issue. As an example, some Howard orchards appeared to have higher percentages of smaller walnuts from the second and third sets and it is questionable if they will reach size maturity by harvest.
The weather in the major growing regions continue to be favorable and most believe the quality of this years crop will be above average. In any event, it certainly should be much better than last year’s below quality crop.
Based on the fact that most of California’s other agriculture crops had a late harvest, we are projecting the walnut harvest to be 7-10 days later than normal. However, it usually catches up by the first week in October so should not have too much effect on the mid-varieties (Chandlers, Hartley’s, Tulare’s and Howards’s). However, logistically, it will put pressure on the harvest structure as most of the harvest will come off at the same time.
July shipments were 19,817 tons (inshell equivalent) 6,329 tons less that last July shipments. Total year to date shipments are 444,192 tons compared to 369,401 tons last year. If my August projections of 25,000 tons are correct, we will go into the new crop with a 26,000 ton carry-over. This will give the industry about the same total available tonnage we had last year.
California Walnut Shipments Recap (000)
Month (July) 2008/09 Year to Date 2009/10 Year to Date Percent
Inshell (lbs.) 1,366 172,906 692 205,073 18.6%
Shelled (lbs.) 23,171 257,482 16,978 297,923 15.7%
(Inshell eqv.) 26,146 369,401 19,817 444,192 20.2%
New crop Inshell business (Chandler) seems to be a little heavier than normal but expect it to taper off as we get closer to the official crop estimate.
The shelled market has firmed somewhat with Chandler Halves and Pieces trading at $3.85 and Regular Light Halves and Pieces at 3.65. Combinations Light Halves and Pieces seem to be firm at $3.40 with Medium and Small material at or slightly less than the Halves and Pieces market.
The walnut handlers will announce their opening prices on September 10th. and expect they will be higher than last years opening.
Please let me know if you have any questions or comments.
Monday, August 09, 2010
Cashew market was quiet in week 31 – some processors in India & Vietnam sold W320 few cents lower than last week. But in general, price levels were unchanged – W240 between 3.30 and 3.35, W320 around 3.15, W450 between 2.95 and 3.00, SW320 around 3.00, SW360 around 2.80, Splits/Butts between 2.65 and 2.70 FOB. Large processors in both origins were not willing to accept bids at lower levels – either nearbys or forwards.
RCN market was steady with afloat / spot parcels of IVC being traded around 950 and GB around 1150 C&F. It is too early for East Africa news (except that it is more or less certain that Tanzania will increase export duty). Prices for early shipments from Indonesia are very high.
Here are some figures for the main Asian suppliers :
FH 2010 FH 2009
Vietnam Production (est) 300,000 350,000
Vietnam Exports 79,730 69,250
India Production (est) 450,000 500,000
India Imports 347,100 334,700
India Exports 51,930 51,740
RCN imports into India in SH 2010 will be lower due to lower overall availability (estimates of shortage vary from 5 to 10%) and more imports by Vietnam due to a smaller crop there. Kernel exports in SH 2010 are also expected to be lower due to lower availability in both origins PLUS strong domestic demand in India.
Although usage in some markets in 2010 will be lower than 2009, overall usage is unlikely to be affected due to good Asian usage. So, these figures lead us to believe that end of 2010 will see lower than normal inventories – especially in the major importing countries which have been buying few months needs at a time. Supply tightness will ease in SH 2011 only if 2011 Northern crops are good (above normal). OR if there is a big drop in usage in FH 2011 !!
Looking at these fundamental factors + peak consumption in Asia in Aug-Nov + pattern of regular buying by USA & Europe for few months at a time, we can expect good activity in next 2-3 months. There does not seem to be much chance of a price decline in 2010 although there may be small dips when market is quiet. We might see a price decline in 2nd or 3rd quarter of 2011 but that will depend on the 2011 crops and FH 2011 usage. The only other reason for a reversal of current firm trend would be external factors (economic and financial situation) or a big drop in prices of other nuts.
Although we are not overly bullish about the long term (too many variables and change in market structure make it difficult to predict trend beyond a few months) we do feel that market will continue to move around the current levels with possibility of some price increase in the next 2-3 months – any dip in the meantime would be a opportunity to cover part of the needs (at least for next 2-3 quarters).
Would appreciate your comments on market situation, views & forecast of demand + market trend and any interesting news / information
Monday, July 19, 2010
Cashew market was quiet in week 28 but undertone is firm. There is some resistance to higher levels being quoted from India (W240 from 3.25 to 3.30, W320 around 3.10, W450 around 2.95 FOB) but processors do not seem to be willing to sell at lower levels (there is reasonable buying interest few cents below offered levels and stray business was done). Some processors in Vietnam are making occassional sales few cents below India. Brazil sold few cents higher than India – they may not have much to offer. Activity in Indian domestic market is picking up – prices for brokens and large wholes have moved up.
RCN prices moved up a bit with trades for IVC between 900 and 950 C&F and GB around 1150 C&F. There is some concern about the crops in Brazil and Indonesia but we feel that a realistic picture of prospects will be available only in Sep. There is talk of higher export duty on Tanzania RCN.
In last few weeks, there has been a fair amount of business with all markets for Jul-Oct shipments and some business has been done for forwards as well. This seems to indicate current levels are comfortable. BUT, neither the processors or buyers seem to be interested to go out on the limb and take large positions. Processors do not have any replacement RCN available – so, they are reluctant to sell large volume at one price and be left with little to sell if prices move up. Buyers do want to build large positions as there is uncertainty about demand & usage in the main markets. Prices for some other nuts have softened recently and this is adding to buyers reluctance.
For the next 2-3 months, market movement will depend on kernel buying interest as there is no fresh RCN to be purchased. There is nothing on the horizon to alter prospects for market trend – regular activity will keep the market steady and if there is any need for large buying, we will see a spike in prices. We might see a dip in prices if there are several quiet weeks but large or sustained decline seems to be unlikely in 2010. Peak for 2010 is still to be seen.
It is very difficult to judge trends for 2011 because there are so many uncertainties & variables (fragile financial & economic situation in developed economies is adding to the uncertainty). Overall, it certainly seems that a big decline in cashew price range is possible only if there is a sharp & large decline in usage in both USA & EU which seems unlikely or if there is a big increase in supply which could happen in SH of 2011 (at the earliest).
Would appreciate your comments on current situation, views and forecast of trend & prospects and any other news + information.
Pankaj N. Sampat