Tuesday, July 06, 2010

Weekly Cashews Update

JULY 3, 2010
There has been a fair amount of activity in the Cashew Market in weeks 25 & 26. But hardly any movement in prices. Business was done for W240 around 3.15, W320 around 2.95, W450 around 2.80 FOB. Prices in domestic market moved up a bit (more for the brokens).
RCN market was also steady with business being done for afloat parcels of IVC around 900 and Guinea Bissau around 1125 C&F India. There are offers at lower prices from origin for limited quantities of lower yield RCN but processors are not showing interest since better quality afloat parcels are available at reasonable prices.
There is nothing new to say about the fundamentals. RCN supply for 2010 is more or less known within a 5 percent range (timely conversion to kernels is likely to be an issue). On the demand side, trend of regular buying for nearbys is likely to continue (due to uncertainty of demand trends + general economic situation, no large forward positions are being taken).
We do not have much information on actual offtake trends and demand forecasts for cashews (and nuts in general) in the main importing countries + would appreciate any information you can provide.
As discussed earlier, peak consumption period in most markets will start in a few weeks. If offtake is normal (or even little bit lower), prices will continue to move in current range (downside is limited as supply is lower than last year). If spot / nearby offtake is more than expected, we could see prices moving up in Aug-Oct which would mean upward pressure on RCN prices in the last quarter.
Normally, Southern crop RCN is traded higher than Northern crop because of better quality & much smaller quantity. This year there is some uncertainty about next year contracting which normally happens in Aug-Oct. If the contracting is for lower volume / period and if the spot / nearby demand in that period is also slow, processors will be in less of a hurry to buy Southern crops. This may reduce the premium for the Southern crop (although there are some processors – especially those who cater to Indian market – who rush to buy early arrivals).
Overall, most people expect market to move in the current range for next few months with some possibility of a price increase in Aug-Oct (depending on factors mentioned above). There is very little chance of a big decline in prices this year. The only bearish factor is the economic situation – if things worsen in next few months, it will adversely impact the demand forecast + market sentiment + ability / willingness to take large positions.
Please advise your comments on market situation, views on prospects for coming weeks / months and any other news / information.
Regards,Pankaj N. Sampat

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