MAR 13, 2010
Cashew prices continued to move up in Week 10 – especially for W320. There was not much volume traded but undertone was firm. Most of the limited business was with USA but there were some sales to Europe & other markets too. W320 were traded from 2.60 to 2.70 FOB. Prices for other grades also moved up a bit e.g. W240 around 3.00 and W450 around 2.50 FOB. Large processors are still not offering.
RCN prices moved up by 50-75 dollars i.e. Benin from 875 to 930-940 C&F, IVC from 720-730 to 775-780 C&F. Reports of slow arrivals in Benin and delays in resolving tax & movement issues in IVC seems to have caused this spike. Except for some shipments from Nigeria, physical movements from other WA origins have not started yet. Indian RCN prices moved up about 100 dollars a ton (not much impact for exporting processors but can have sentimental effect if they continue to remain high). So far, there is no definite indication of crop size in any origin but overall, everything seems to point to normal crops.
Crop news & perceptions – and rumours - will keep the market volatile for next few months when over 1.50 million tons of RCN (nearly 75% of the world production) is to be traded. This is not the best time to take long or large positions but changed market dynamics may force processors & buyers to do so during this volatile period.
Kernel offtake news is confusing. After strong growth in SH 2009, Asia is quiet now (this is normal for this time of the year). Europe reports lower usage whereas USA seems to be slightly better (inventories in both markets seem to be low as spot prices are reported to be high). Other markets have more or less steady growth.
Recent rally in kernel market seems to be due to (1) natural correction after big drop from 2.95 to 2.50 (2) covering by traders who have made sales for FH 2010 in last quarter of 2009 when prices were higher (3) some fresh business by roasters (4) caution buying due to high RCN prices. It is to be seen whether this is a temporary spurt and prices will drift lower again when RCN arrivals pick up OR whether prices will stabilize around current levels.
Volume traded has been small when market moved from 2.95 to 2.50 and also when it moved back from 2.50 to 2.70 FOB. Just as buyers have less cover for second half, processors also do not have any big sales for forwards. Who has to move first – processors or buyers – will determine price range in medium term. Meanwhile, steady buying for nearbys will provide a floor to the market.
Would appreciate your comments on market situation, views & forecast of demand + price trend and any other news + info
Regards,Pankaj N. Sampat