AUGUST 7, 2010
Cashew market was quiet in week 31 – some processors in India & Vietnam sold W320 few cents lower than last week. But in general, price levels were unchanged – W240 between 3.30 and 3.35, W320 around 3.15, W450 between 2.95 and 3.00, SW320 around 3.00, SW360 around 2.80, Splits/Butts between 2.65 and 2.70 FOB. Large processors in both origins were not willing to accept bids at lower levels – either nearbys or forwards.
RCN market was steady with afloat / spot parcels of IVC being traded around 950 and GB around 1150 C&F. It is too early for East Africa news (except that it is more or less certain that Tanzania will increase export duty). Prices for early shipments from Indonesia are very high.
Here are some figures for the main Asian suppliers :
FH 2010 FH 2009
Vietnam Production (est) 300,000 350,000
Vietnam Exports 79,730 69,250
India Production (est) 450,000 500,000
India Imports 347,100 334,700
India Exports 51,930 51,740
RCN imports into India in SH 2010 will be lower due to lower overall availability (estimates of shortage vary from 5 to 10%) and more imports by Vietnam due to a smaller crop there. Kernel exports in SH 2010 are also expected to be lower due to lower availability in both origins PLUS strong domestic demand in India.
Although usage in some markets in 2010 will be lower than 2009, overall usage is unlikely to be affected due to good Asian usage. So, these figures lead us to believe that end of 2010 will see lower than normal inventories – especially in the major importing countries which have been buying few months needs at a time. Supply tightness will ease in SH 2011 only if 2011 Northern crops are good (above normal). OR if there is a big drop in usage in FH 2011 !!
Looking at these fundamental factors + peak consumption in Asia in Aug-Nov + pattern of regular buying by USA & Europe for few months at a time, we can expect good activity in next 2-3 months. There does not seem to be much chance of a price decline in 2010 although there may be small dips when market is quiet. We might see a price decline in 2nd or 3rd quarter of 2011 but that will depend on the 2011 crops and FH 2011 usage. The only other reason for a reversal of current firm trend would be external factors (economic and financial situation) or a big drop in prices of other nuts.
Although we are not overly bullish about the long term (too many variables and change in market structure make it difficult to predict trend beyond a few months) we do feel that market will continue to move around the current levels with possibility of some price increase in the next 2-3 months – any dip in the meantime would be a opportunity to cover part of the needs (at least for next 2-3 quarters).
Would appreciate your comments on market situation, views & forecast of demand + market trend and any interesting news / information