OCT 16, 2010
Cashew market was extremely quiet in Week 41 – October has been much quieter than normal. Some processors sold W320 around 3.20, W450 around 3.10, SW around 3.00 FOB. There was fair interest for W320 around 3.20 FOB for Oct-Dec shipments but very few sellers. Large processors in India & Vietnam offered (and sold) some volume in the last two weeks – W240 around 3.60 and W320 around 3.30 FOB. Despite the relative quietness, large processors are not inclined to reduce prices to make sales.
After a month of good activity, Indian domestic market was quiet and prices drifted a little lower. The next big round of domestic activity for winter & marriage season is expected from mid Nov (after the Diwali festival). Vietnam processors expect good activity from their equivalent of domestic market (China) during Oct/Nov.
No fresh news on supply side. If arrivals in Indonesia do not improve in next 4-6 weeks, fears of a big shortage (quantity and quality) will be proved right. Brazil continues to be a question mark – some people say crop may be around 250,000mt. It is to be seen whether late start to the crop means that big a shortage or whether crop extends into Feb/Mar compared to the normal end of collection in Jan. Very high prices (about 15% higher than kernel parity) are being paid in Tanzania auctions. It seems that prices will not ease till the local processors have covered their requirement. Too early to talk about Mozambique as shipments unlikely before Jan.
On the back of some low priced purchases from few processors for Oct-Dec and probably with a view to getting some more sales on the books for 2011 deliveries, some importers have reduced their offers for FH 2011 – they are offering W320 around 3.35 C&F. This has not induced any significant buying - roasters seem reluctant to buy until they have an idea of retail offtake trends. At the same time, the lower offers from importers are not spooking origins to reduce their prices – processors are concerned about RCN prices (tightness of supply may not allow prices to come down even if kernel demand is slow).
It is difficult to estimate demand trend – there are some who feel that the high prices will mean a big decline in usage in EU & USA. Others feel that the impact may not be much since prices of almost all nuts are high. Although promotions will be for products which are more abundantly available, the base demand will certainly be there – all that is available will be consumed. Until supply improves significantly, price will be determined by periodic bursts of buying & selling (volatile in the current range).
If the RCN prices do not come down in 2010 and if the Brazil crop is as bad as feared, kernel prices will continue to be firm till mid 2011 (unless there is a big decline in usage in first quarter 2011 – a single digit decline will not have much impact). Even in the second half of 2011, kernel prices will soften only if Northern crops are very good and RCN prices decline significantly.
Like the last six months, the next few months will continue to be difficult – spot / nearby demand will have significant impact on price and this will determine forward quotes as well (unless there is a reasonable cushion, processors will be reluctant to sell). Till supply increases or sentiment changes, everyone in the chain (processors – traders – roasters) will have to adjust their strategies to have some cover for a few months to avoid being caught on the wrong foot.
Kindly let us know your comments on market situation, views on future trend + prospects and any other information + news
Regards,
Pankaj N. Sampat
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment