Monday, May 03, 2010

Weekly cashews update

MAY 1, 2010

Cashew prices moved up a few cents in Week 17. Business was done for W240 from 3.05 to 3.15, W320 around 2.90, W450 from 2.70 to 2.75 FOB. Most of the business was for May-Jul/Aug but some business was done for last quarter as well. Volumes traded were not very large but all markets have been buying some quantities in the last two weeks.

RCN shipments from IVC are slow due to various logistic problems. Prices there have gone up in the last two weeks. Opening prices for Guinea Bissau RCN are higher than expected. Supply does not seem to be a problem but the market is influenced by sentiments, increase in number of small buyers, disruptions in flow, fear of being left with inadequate rawmaterial, etc. Even if prices are unworkable, there is always someone in the market and this is providing support to the market. Unless kernel demand picks up during May, processors will find it difficult to buy big quantities at these higher prices.

On the kernel side, buyers seem to be content with buying when they need. They do not seem to have confidence to cover large volumes – they have been covering small quantities at all levels. Some buyers have started buying for forward positions but quantities have been limited. Asian markets are usually quiet during this period – activity will pick up in few weeks and will peak in third quarter. Asian markets traditionally buy spot / nearby and this leads to spikes in activity and prices.
Prices of almost all other nuts are higher than historical average – in some cases, the increase is much more than cashews. Overall nut usage in the two main cashew importing regions (USA & EU) may not be much different from last few years - there might be a shift in individual items depending on availability and extent of price changes. Change in buying pattern will keep the market volatile – decision making becomes difficult.

Our feeling is that unless RCN prices come down in May/Jun, downside for kernel market is limited. Upside will depend on when & how much buyers need to buy for second half deliveries.

Would appreciate your comments on market situation, views & forecast of demand and price trends and any other news or information

Regards,Pankaj N. Sampat

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