Weekly cashews update

JULY 17, 2010
Cashew market was quiet in week 28 but undertone is firm. There is some resistance to higher levels being quoted from India (W240 from 3.25 to 3.30, W320 around 3.10, W450 around 2.95 FOB) but processors do not seem to be willing to sell at lower levels (there is reasonable buying interest few cents below offered levels and stray business was done). Some processors in Vietnam are making occassional sales few cents below India. Brazil sold few cents higher than India – they may not have much to offer. Activity in Indian domestic market is picking up – prices for brokens and large wholes have moved up.
RCN prices moved up a bit with trades for IVC between 900 and 950 C&F and GB around 1150 C&F. There is some concern about the crops in Brazil and Indonesia but we feel that a realistic picture of prospects will be available only in Sep. There is talk of higher export duty on Tanzania RCN.
In last few weeks, there has been a fair amount of business with all markets for Jul-Oct shipments and some business has been done for forwards as well. This seems to indicate current levels are comfortable. BUT, neither the processors or buyers seem to be interested to go out on the limb and take large positions. Processors do not have any replacement RCN available – so, they are reluctant to sell large volume at one price and be left with little to sell if prices move up. Buyers do want to build large positions as there is uncertainty about demand & usage in the main markets. Prices for some other nuts have softened recently and this is adding to buyers reluctance.
For the next 2-3 months, market movement will depend on kernel buying interest as there is no fresh RCN to be purchased. There is nothing on the horizon to alter prospects for market trend – regular activity will keep the market steady and if there is any need for large buying, we will see a spike in prices. We might see a dip in prices if there are several quiet weeks but large or sustained decline seems to be unlikely in 2010. Peak for 2010 is still to be seen.
It is very difficult to judge trends for 2011 because there are so many uncertainties & variables (fragile financial & economic situation in developed economies is adding to the uncertainty). Overall, it certainly seems that a big decline in cashew price range is possible only if there is a sharp & large decline in usage in both USA & EU which seems unlikely or if there is a big increase in supply which could happen in SH of 2011 (at the earliest).
Would appreciate your comments on current situation, views and forecast of trend & prospects and any other news + information.
Regards,
Pankaj N. Sampat