Monday, February 15, 2010

Weekly Cashews update

FEB 13, 2010

Cashew market was VERY QUIET in week 6. Some business done for W320 around 2.70 FOB by a few processors. No trades reported in other grades. No change in general price level i.e. W240 around 2.95, W320 around 2.75, W450 around 2.55 FOB. With Vietnam on holiday, next week is also expected to be quiet.

Although physical movement of new crop WA RCN will start after a few weeks, offers have come down from a high of US$ 1000 to US$ 900 for Benin, from US$ 850 to US$ 800 C&F for IVC and from US$ 750 to US$ 700 for Nigeria. Some trades reported for all three origins at several levels in this decline but we have to see what prices are actually paid when shipments start. If all crops – India, Vietnam, West Africa – are normal, we can expect some further decline in RCN prices.

For the time being, the kernel market seems to have stabilised. With 70% of the world cashew crop to be traded in next four months, nobody seems to be in a hurry to take any large position. Processors want to see how RCN prices develop in coming weeks before making sales. Buyers are prepared to wait for fresh contracting with roasters and retailers before making new purchases.

If the quiet period continues and if RCN prices decline in next six weeks, kernel prices will drift lower (which would be a good thing as it would induce some buyers to enter the market). But if for some reason, the need to buy kernels emerges before the RCN shipments start, prices might harden a bit.

The change in the buying pattern of the two big markets (USA & EU) and the increased consumption in India & China plus the larger volumes being shipped to other markets are all leading to emphasis on buying & pricing for the short term. This makes it difficult to predict market trend for more than a few weeks and adds to reluctance of processors to make large forward sales unless there is a reasonable cushion to absorb any sudden shocks Uncertainties in the economic situation (leading to changes in cash & inventory management) and currency fluctuations are increasing the potential for volatility.

Overall, it seems that current range is a reasonable level for cashews. Any major move – in either direction – would not be good for the long term health of the cashew business.

Please advise your views on market situation, views & forecast of demand and price trend and any other info / news

Pankaj N. Sampat

No comments: