Weekly Cashews Update

SEP 18, 2010

In Week 37, there was hardly any change in cashew prices - despite relative quietness for more than a month (although some business is being done every week). Some business was done from Vietnam for W240 from 3.45 to 3.50 and W320 from 3.25 to 3.30 FOB. Prices from India were 10 cents higher – some business was done to buyers who are prepared to pay few cents higher to specific processors for quality and performance. Large processors from Vietnam were also quoting same levels as India. Prices in domestic market in India for almost all grades is higher than international market – so there is no pressure on Indian processors to sell at lower levels (at least for the time being).

There is no adverse news about crop prospects in East Africa but there is no certainty when shipments will start. There are mixed reports about Indonesia & Brazil crops. RCN traders are expecting prices for East Africa & Indonesia RCN to be higher than last season as kernel prices are higher but unless kernel activity (especially for 2011 deliveries) picks up in the next few weeks, processors will be reluctant to take on positions at higher levels. A realistic estimate of Southern crops and price trend will not be available till late Oct/early Nov. Meantime, spot market for West Africa RCN in India and Vietnam continues to be firm.

There is nothing on the horizon to change outlook for market – it continues to be hazy !!

There is no pressure on processors to reduce prices as they have limited unsold quantities from RCN bought in 2010 and they do not know what prices they will have to pay for the limited RCN available till the next Northern crops beginning in March 2011.

Uncertainty about demand prospects and concern about impact of high prices makes buyers reluctant to buy forward positions at higher levels. In first half 2010, growth has been about 6-7% in USA and about 3-5% in the Europe (other markets have grown faster). In most markets (except Asia), the higher prices of last few months have not yet been passed on to the retail level.

Traditional Asian demand which will continue into Jan/Feb and the lower processing in first quarter should keep the market firm for the next few months. During this period, kernel prices will soften only if RCN prices come down in Oct/Nov and this will happen only if there is very little kernel business done for 2011 deliveries in the next two months.

If there is a doube digit decline in usage in USA & EU in first few months of 2011, we can expect lower kernel prices when the Northern crops are harvested after Mar 2011 but till then, there does not seem to be much chance of a major decline in prices. If the usage decline is in single digits, the decline prices may not be much as even a steady Asian demand will support the market if prices come down a bit (unless the Northern crops are much bigger than 2010).

If there are no big surprises on demand or supply side, we continue to expect a firm market for next few months, a volatile market in the first quarter with a big question mark for middle & second half of 2011.

Would appreciate your comments on market situation, views on market prospects and any info / news



Regards,
Pankaj N. Sampat