JUNE 26, 2010
Cashew market continued to be steady in week 25. Prices were unchanged i.e. W240 around 3.15, W320 around 2.95, W450 around 2.80 FOB and undertone was firm. There was reasonable buying interest and stray sales were made to some markets (below & above the levels mentioned).
RCN market was also steady with business being done for afloat parcels of IVC around 900 and Guinea Bissau around 1125 C&F India. Traders do not seem to be in hurry to sell as there is not much quantity left in origins now. Small processors – exporting and non exporting – are buying small lots when they need to, content to let traders hold inventory.
Supply shortage – although estimates vary from 100,000 to 200,000mt – is more or less factored into the current price range. In the next 2-3 months, price trend will be determined by demand signals and timing of any large buying. As we have seen for more than a year now, there will be periodic bursts of activity on buying side – mainly for prompt and nearby shipments. More so because the next few months are peak consumption period in almost all markets. This will probably support market in the middle of the current range.
Kernel inventories are low – in importing as well as processing countries. Although there may be adequate RCN for processing till the Southern crops start in Oct, all of it may not be converted to kernels at the usual speed. This will mean periodic tightness in supply in next few months, adding to the pressure on spot prices.
Even when crops are normal, Southern crops are traditionally traded at higher levels – this will mean reluctance amongst processors to sell kernels unless they get reasonable price based on replacement cost. Having seen a steady and regular demand for prompt & nearby deliveries, they will not be in a hurry to sell. Increases in processing & transport costs and lower kernel yield will also add to the increase in selling ideas / parity levels.
Except for Almond prices – which came down in June – prices for all other nuts continue to be firm despite lack of activity. We have to see what impact this will have on offtake in SH 2010 and forecast for FH 2011.
If the large importing regions – USA & Europe NEED to buy additional volume in third quarter for 2010 shipments, we could see the current price range being breached. But if the uncertain economic situation leads to retailers managing sales within what they have already contracted for 2010, we could see market continue in current range for rest of the year with periodic spikes and dips. Prices dropping below the current range seems unlikely unless something dramatic like Sep/Oct 2008 happens again.
Would appreciate your comments on market situation + views on prospects for coming months + any interesting news or information
Regards,Pankaj N. Sampat