JAN 29, 201
Cashew prices moved up a few cents in Week 4 although very little business was done. Levels traded were US$ 4.30-35 for W320 and US$ 3.75-3.85 for W320. Some business was done few cents higher as well. Most of the trades were for Feb-Apr shipments. Indian domestic market has been quiet for two weeks and prices drifted a little lower from the peaks.
There is not much trading in RCN. Moz RCN is offered around US$ 1450 and there are reports of Nigeria RCN trading around US$ 1225. Indicative offers are around US$ 1500 for Benin and around US$ 1425 for IVC/Ghana. Our feeling is that there will be quite a bit of volatility in offers for WA RCN during next few weeks. Actual opening price levels will be known only by mid or late March and bulk of the trade will happen in Apr/early May. Till mid March, all quotes are speculative and can only be used as an indication of likely trend. At the moment, all origins are expecting normal crops but low inventories with India & Vietnam processors means processors may not have the luxury of waiting for peak arrivals to bring prices down - they might have to start buying as soon as physical arrivals start.
As we have discussed earlier, the industry needs good crops in all origins in 2011 to replenish drawn down inventory and bring reasonable balance between supply & demand. In addition to this, the other short term factors which will impact 2011 market trend are the offtake figures in the first quarter and the kernel activity in Feb/Mar from the two major importing regions. Apart from this, we have to keep close watch on external factors – economic news (signals are for a smoother and growth year) + currency movements + prices of other nuts.
It seems that most buyers need to buy for shipment beyond April but are trying to delay buying as much as they can. They do not want to extend cover at current levels and then find that first quarter offtake is lower than planned. If they can use existing cover to take them through a few more weeks, they hope that prices will ease when RCN arrivals are at peak in Apr/May and then they can cover their second half requirements. Asian demand is expected to be lower for a few weeks and this might lead to a drifting of kernel prices IF the buyers in USA & Europe are also able to keep away from the market in Feb/Mar. This will enable processors to be slow in initial buying and might lead to softer RCN prices in Apr/May (and this will aid further drifting of kernel prices).
On the other hand, if there is steady periodic buying from USA & Europe – like what we have seen in the last 6-9 months - prices will be remain steady and may even move up a bit (in case any one wants to buy volume for spread delivery). This will add to the need of processors to start buying RCN quickly and opening prices will not come down. Any crop shortage (actual or perceived) or any big delay in movement of RCN will add to the potential for higher RCN prices. Consequently, kernel prices will remain firm.
It is impossible to judge (or even guess) market trend beyond a few months. But it certainly seems that the scales are tilted in favour of a steady & firm market for next few months. Although we might see some small dip in prices in the coming weeks if activity is slow or if there are encouraging reports from origin, a significant price decline in the short term is possible only if there is VERY VERY low buying interest PLUS all the crops are very good and there are no supply distortions.
Regards,
Pankaj N. Sampat
Monday, January 31, 2011
JAN 29, 201
Cashew prices moved up a few cents in Week 4 although very little business was done. Levels traded were US$ 4.30-35 for W320 and US$ 3.75-3.85 for W320. Some business was done few cents higher as well. Most of the trades were for Feb-Apr shipments. Indian domestic market has been quiet for two weeks and prices drifted a little lower from the peaks.
There is not much trading in RCN. Moz RCN is offered around US$ 1450 and there are reports of Nigeria RCN trading around US$ 1225. Indicative offers are around US$ 1500 for Benin and around US$ 1425 for IVC/Ghana. Our feeling is that there will be quite a bit of volatility in offers for WA RCN during next few weeks. Actual opening price levels will be known only by mid or late March and bulk of the trade will happen in Apr/early May. Till mid March, all quotes are speculative and can only be used as an indication of likely trend. At the moment, all origins are expecting normal crops but low inventories with India & Vietnam processors means processors may not have the luxury of waiting for peak arrivals to bring prices down - they might have to start buying as soon as physical arrivals start.
As we have discussed earlier, the industry needs good crops in all origins in 2011 to replenish drawn down inventory and bring reasonable balance between supply & demand. In addition to this, the other short term factors which will impact 2011 market trend are the offtake figures in the first quarter and the kernel activity in Feb/Mar from the two major importing regions. Apart from this, we have to keep close watch on external factors – economic news (signals are for a smoother and growth year) + currency movements + prices of other nuts.
It seems that most buyers need to buy for shipment beyond April but are trying to delay buying as much as they can. They do not want to extend cover at current levels and then find that first quarter offtake is lower than planned. If they can use existing cover to take them through a few more weeks, they hope that prices will ease when RCN arrivals are at peak in Apr/May and then they can cover their second half requirements. Asian demand is expected to be lower for a few weeks and this might lead to a drifting of kernel prices IF the buyers in USA & Europe are also able to keep away from the market in Feb/Mar. This will enable processors to be slow in initial buying and might lead to softer RCN prices in Apr/May (and this will aid further drifting of kernel prices).
On the other hand, if there is steady periodic buying from USA & Europe – like what we have seen in the last 6-9 months - prices will be remain steady and may even move up a bit (in case any one wants to buy volume for spread delivery). This will add to the need of processors to start buying RCN quickly and opening prices will not come down. Any crop shortage (actual or perceived) or any big delay in movement of RCN will add to the potential for higher RCN prices. Consequently, kernel prices will remain firm.
It is impossible to judge (or even guess) market trend beyond a few months. But it certainly seems that the scales are tilted in favour of a steady & firm market for next few months. Although we might see some small dip in prices in the coming weeks if activity is slow or if there are encouraging reports from origin, a significant price decline in the short term is possible only if there is VERY VERY low buying interest PLUS all the crops are very good and there are no supply distortions.
Regards,
Pankaj N. Sampat
Cashew prices moved up a few cents in Week 4 although very little business was done. Levels traded were US$ 4.30-35 for W320 and US$ 3.75-3.85 for W320. Some business was done few cents higher as well. Most of the trades were for Feb-Apr shipments. Indian domestic market has been quiet for two weeks and prices drifted a little lower from the peaks.
There is not much trading in RCN. Moz RCN is offered around US$ 1450 and there are reports of Nigeria RCN trading around US$ 1225. Indicative offers are around US$ 1500 for Benin and around US$ 1425 for IVC/Ghana. Our feeling is that there will be quite a bit of volatility in offers for WA RCN during next few weeks. Actual opening price levels will be known only by mid or late March and bulk of the trade will happen in Apr/early May. Till mid March, all quotes are speculative and can only be used as an indication of likely trend. At the moment, all origins are expecting normal crops but low inventories with India & Vietnam processors means processors may not have the luxury of waiting for peak arrivals to bring prices down - they might have to start buying as soon as physical arrivals start.
As we have discussed earlier, the industry needs good crops in all origins in 2011 to replenish drawn down inventory and bring reasonable balance between supply & demand. In addition to this, the other short term factors which will impact 2011 market trend are the offtake figures in the first quarter and the kernel activity in Feb/Mar from the two major importing regions. Apart from this, we have to keep close watch on external factors – economic news (signals are for a smoother and growth year) + currency movements + prices of other nuts.
It seems that most buyers need to buy for shipment beyond April but are trying to delay buying as much as they can. They do not want to extend cover at current levels and then find that first quarter offtake is lower than planned. If they can use existing cover to take them through a few more weeks, they hope that prices will ease when RCN arrivals are at peak in Apr/May and then they can cover their second half requirements. Asian demand is expected to be lower for a few weeks and this might lead to a drifting of kernel prices IF the buyers in USA & Europe are also able to keep away from the market in Feb/Mar. This will enable processors to be slow in initial buying and might lead to softer RCN prices in Apr/May (and this will aid further drifting of kernel prices).
On the other hand, if there is steady periodic buying from USA & Europe – like what we have seen in the last 6-9 months - prices will be remain steady and may even move up a bit (in case any one wants to buy volume for spread delivery). This will add to the need of processors to start buying RCN quickly and opening prices will not come down. Any crop shortage (actual or perceived) or any big delay in movement of RCN will add to the potential for higher RCN prices. Consequently, kernel prices will remain firm.
It is impossible to judge (or even guess) market trend beyond a few months. But it certainly seems that the scales are tilted in favour of a steady & firm market for next few months. Although we might see some small dip in prices in the coming weeks if activity is slow or if there are encouraging reports from origin, a significant price decline in the short term is possible only if there is VERY VERY low buying interest PLUS all the crops are very good and there are no supply distortions.
Regards,
Pankaj N. Sampat
Monday, January 24, 2011
Weekly Cashews Update
JAN 22, 2011
In Week 3, cashew prices were steady with a firm undertone – the very low offers seen couple of weeks ago are out of the market. Range of prices offered and traded continue to be wide : W240 from 4.20 to 4.30 and W320 from 3.65 to 3.85 FOB. There is reasonable buying interest at the lower end of the range but not much selling interest. Resellers are quoting few cents below the top end of the range. Despite quiet market, most processors are not willing to reduce prices to get orders.
RCN prices came down a bit – Tanzania due to lower quality and Mozambique due to lack of buying interest (since kernel market has been quiet for almost six weeks now) but the quantity available is limited. All eyes now are on the three big crops (India + Vietnam + West Africa) which will start arriving in a few weeks. So far there is no adverse news from any origin (except for the concern about movement in IVC – since it contributes over 15% of world production, developments in IVC need to be watched closely). There will be lots of rumours about crop prospects in the next 2-3 months but until crops are well under way (say end Mar / ear Apr) it will be difficult to have a reasonable estimate of the crops.
On the demand side, Asian markets will continue to buy steadily but volumes may not be as big as last quarter of 2010 (which is a good thing as availability in first quarter will also be lower due to holidays in Vietnam + lower RCN availability in India). USA & European buying will depend on offtake by retailers in Jan/Feb. General feeling is that there is very little cover beyond April. If there is a big drop in first quarter offtake, buyers may be able to extend cover and delay any big buying for a few weeks. If the drop is not as big as feared, steady buying can be expected from USA & Europe as well.
There is widespread uncertainty and concern in USA & Europe about the impact of the higher prices on consumption. Apart from the fact that almost all nuts (for that matter almost all commodities) have seen significant price increases in the last year, we have to keep in mind the change that we have seen in geographical distibution of cashew consumption. USA & Europe now account for less than 50% of world consumption. A 10% decline in these markets means a 5% decline in world consumption which is less than the 10-12% reduction in supply we have seen in 2010. Demand-supply will be balanced only if there is a very big decline in consumption coupled with good (or atleast normal) 2011 crops.
Over the next few weeks sellers and buyers will be inclined to sell or buy only what they absolutely need to – nobody will be in a mood to take any big positions because of the uncertainty. So, prices can be expected to move in a narrow range. By April, there will be some clarity on both sides of the equation – crop prospects and demand trends. Before that, if anybody needs to take any large position – buying or selling – there will have to be a sufficient premium or discount to induce the other side to act.
To sum up, we expect a lot of volatility for couple of months (depending on news AND rumours about crop prospects) and a steady market around current levels for next few months (unless there is big negative news from the demand side).
Regards,
Pankaj N. Sampat
In Week 3, cashew prices were steady with a firm undertone – the very low offers seen couple of weeks ago are out of the market. Range of prices offered and traded continue to be wide : W240 from 4.20 to 4.30 and W320 from 3.65 to 3.85 FOB. There is reasonable buying interest at the lower end of the range but not much selling interest. Resellers are quoting few cents below the top end of the range. Despite quiet market, most processors are not willing to reduce prices to get orders.
RCN prices came down a bit – Tanzania due to lower quality and Mozambique due to lack of buying interest (since kernel market has been quiet for almost six weeks now) but the quantity available is limited. All eyes now are on the three big crops (India + Vietnam + West Africa) which will start arriving in a few weeks. So far there is no adverse news from any origin (except for the concern about movement in IVC – since it contributes over 15% of world production, developments in IVC need to be watched closely). There will be lots of rumours about crop prospects in the next 2-3 months but until crops are well under way (say end Mar / ear Apr) it will be difficult to have a reasonable estimate of the crops.
On the demand side, Asian markets will continue to buy steadily but volumes may not be as big as last quarter of 2010 (which is a good thing as availability in first quarter will also be lower due to holidays in Vietnam + lower RCN availability in India). USA & European buying will depend on offtake by retailers in Jan/Feb. General feeling is that there is very little cover beyond April. If there is a big drop in first quarter offtake, buyers may be able to extend cover and delay any big buying for a few weeks. If the drop is not as big as feared, steady buying can be expected from USA & Europe as well.
There is widespread uncertainty and concern in USA & Europe about the impact of the higher prices on consumption. Apart from the fact that almost all nuts (for that matter almost all commodities) have seen significant price increases in the last year, we have to keep in mind the change that we have seen in geographical distibution of cashew consumption. USA & Europe now account for less than 50% of world consumption. A 10% decline in these markets means a 5% decline in world consumption which is less than the 10-12% reduction in supply we have seen in 2010. Demand-supply will be balanced only if there is a very big decline in consumption coupled with good (or atleast normal) 2011 crops.
Over the next few weeks sellers and buyers will be inclined to sell or buy only what they absolutely need to – nobody will be in a mood to take any big positions because of the uncertainty. So, prices can be expected to move in a narrow range. By April, there will be some clarity on both sides of the equation – crop prospects and demand trends. Before that, if anybody needs to take any large position – buying or selling – there will have to be a sufficient premium or discount to induce the other side to act.
To sum up, we expect a lot of volatility for couple of months (depending on news AND rumours about crop prospects) and a steady market around current levels for next few months (unless there is big negative news from the demand side).
Regards,
Pankaj N. Sampat
Thursday, January 13, 2011
Dec.10 Almond Industry Shipments
Please note that the following Dec.’10 industry shipments numbers were published this week:
Dec. 10 Dec. ’09 % Change
Domestic 40.6mm 33.9mm +19.8
Export 120.3mm 113.6mm + 5.9
Total 160.9mm 147.5mm + 9.2
Based on December shipments, all market indicators point towards a strengthening market. Most processors believe the crop will end up being between 1.5 – 1.55 billion pounds vs. the 1.65 billion forecast. Crop year to date receipts are 1.42 billion pounds.
Regards,
Robert Smith
Dec. 10 Dec. ’09 % Change
Domestic 40.6mm 33.9mm +19.8
Export 120.3mm 113.6mm + 5.9
Total 160.9mm 147.5mm + 9.2
Based on December shipments, all market indicators point towards a strengthening market. Most processors believe the crop will end up being between 1.5 – 1.55 billion pounds vs. the 1.65 billion forecast. Crop year to date receipts are 1.42 billion pounds.
Regards,
Robert Smith
Wednesday, January 12, 2011
WALNUT MARKET/CROP REPORT
WALNUT MARKET/CROP REPORT
CROP:
At least 98 percent of the walnut crop has been delivered to the packers, with the balance held by grower’s at their facilities.
As reported earlier, quality of the 2010 crop was excellent with high yields and light color. However, the nut sizes were well below normal which forced most Handlers to pack and market Jumbo/Large blends almost from start of the harvest.
However, this was not a problem with the inshell shelling varieties as meat yields on both Jumbo and Large walnuts are about the same. Most Chandlers were packed 70/30 % Jumbo/Large and the majority of the Hartley’s were packed 80/20 % Jumbo/Large with some straight Jumbo’s bringing a premium.
Again, China/Hong Kong lead the way with total inshell shipments reaching 78.5 million pounds, compared to 28.7 million pounds at this time last year. Turkey inshell shipments were 40.2 million pounds, down 3 million pounds from last year. However, they got a late jump on the market and I have no doubt that next month, they will also be well ahead of last year.
Most industry leaders believe the crop will come in under the official estimate of 510,000 tons. The censuses range between a low of 485,000 tons to a high of 500,000 tons. For what ever it is worth, my projection (3rd so far) is 495,000 tons. The California Walnut Board will announce the final crop numbers in about two weeks.
December’s record inshell shipments of 44.9 million pounds took the year to date total tonnage to 231.0 million pounds, 60.7 million pounds more than last year. However, the shelled “year to date” shipments is off slightly with 132.4 million pounds ship to date against 134.0 million pounds last year.
The inshell equivalent tonnage shipped to date is 267,650 tons compared to 236,702 last year, an increase of 13 percent.
California Walnut Shipments Recap (000)
Month (Dec.) 2009/10 Year to Date 2010/11 Year to Date Percent
In-shell (lbs.) 26,475 170,309 44,942 230,976 35.6%
Shelled (lbs.) 31,795 133,968 33,145 132,381 -1.2%
Total Tons 49,205 236,702 60,569 267,650 13.1%
Market:
After some of the most active walnut trading in recent history, bookings have finally started slowing down. It looks like for now, the China/Hong Kong market is satisfied as well as most of the European markets. However, the Turkey markets is still going strong and are currently buying up most of the remaining inventories.
Some feel China may be back in the market after the Chinese New Year, but I don’t believe there will be much non-committed inventory available for them to book!
Limited bookings in the Light Halves & Piece market is in the $4.00 range with Chandlers about $0.10 higher. Combo Halves and Pieces are at $3.65 with smaller material 5- 10 cents higher than the H&P market. Inshell Jumbo Hartley’s are still trading around the $1.60 level with Jumbo/Larges at $1.55.
Inshell Chandler Jumbo/Large are on both sides of $1.90 with Howard’s and Tulare’s 5-10 cents less.
If the crop comes in at 490,000 tons, the industry has shipped 55 percent of the crop through December. This is 5 percents less than I first predicted. However, I believe January will be another record month and right now, my forecast for shipments through August is 490,000 tons, about the same or maybe a little less that the crop.
This should make for another great year for California walnuts that is if we do not experience another world financial crash.
Let me know if you have any questions.
Kind regards,
Pete
CROP:
At least 98 percent of the walnut crop has been delivered to the packers, with the balance held by grower’s at their facilities.
As reported earlier, quality of the 2010 crop was excellent with high yields and light color. However, the nut sizes were well below normal which forced most Handlers to pack and market Jumbo/Large blends almost from start of the harvest.
However, this was not a problem with the inshell shelling varieties as meat yields on both Jumbo and Large walnuts are about the same. Most Chandlers were packed 70/30 % Jumbo/Large and the majority of the Hartley’s were packed 80/20 % Jumbo/Large with some straight Jumbo’s bringing a premium.
Again, China/Hong Kong lead the way with total inshell shipments reaching 78.5 million pounds, compared to 28.7 million pounds at this time last year. Turkey inshell shipments were 40.2 million pounds, down 3 million pounds from last year. However, they got a late jump on the market and I have no doubt that next month, they will also be well ahead of last year.
Most industry leaders believe the crop will come in under the official estimate of 510,000 tons. The censuses range between a low of 485,000 tons to a high of 500,000 tons. For what ever it is worth, my projection (3rd so far) is 495,000 tons. The California Walnut Board will announce the final crop numbers in about two weeks.
December’s record inshell shipments of 44.9 million pounds took the year to date total tonnage to 231.0 million pounds, 60.7 million pounds more than last year. However, the shelled “year to date” shipments is off slightly with 132.4 million pounds ship to date against 134.0 million pounds last year.
The inshell equivalent tonnage shipped to date is 267,650 tons compared to 236,702 last year, an increase of 13 percent.
California Walnut Shipments Recap (000)
Month (Dec.) 2009/10 Year to Date 2010/11 Year to Date Percent
In-shell (lbs.) 26,475 170,309 44,942 230,976 35.6%
Shelled (lbs.) 31,795 133,968 33,145 132,381 -1.2%
Total Tons 49,205 236,702 60,569 267,650 13.1%
Market:
After some of the most active walnut trading in recent history, bookings have finally started slowing down. It looks like for now, the China/Hong Kong market is satisfied as well as most of the European markets. However, the Turkey markets is still going strong and are currently buying up most of the remaining inventories.
Some feel China may be back in the market after the Chinese New Year, but I don’t believe there will be much non-committed inventory available for them to book!
Limited bookings in the Light Halves & Piece market is in the $4.00 range with Chandlers about $0.10 higher. Combo Halves and Pieces are at $3.65 with smaller material 5- 10 cents higher than the H&P market. Inshell Jumbo Hartley’s are still trading around the $1.60 level with Jumbo/Larges at $1.55.
Inshell Chandler Jumbo/Large are on both sides of $1.90 with Howard’s and Tulare’s 5-10 cents less.
If the crop comes in at 490,000 tons, the industry has shipped 55 percent of the crop through December. This is 5 percents less than I first predicted. However, I believe January will be another record month and right now, my forecast for shipments through August is 490,000 tons, about the same or maybe a little less that the crop.
This should make for another great year for California walnuts that is if we do not experience another world financial crash.
Let me know if you have any questions.
Kind regards,
Pete
Monday, January 10, 2011
Weekly Cashews Update
Jan 8, 2011
Cashew market continued to be quiet in week 1 of 2011 – for more than one month now, there has been very little volume traded to USA & Europe although there has been reasonable business with other markets. During the last two weeks, some processors from Vietnam and India sold W320 to USA & Europe at lower levels (around 3.65 FOB) because they do not have prior sales and need to move stocks before new crops start in March.
Despite the limited buying interest, most processors from both origins were quoting more than 15-20 cents higher. They do not have much to sell for first quarter and they are not willing to sell at lower prices for second & third quarter because (a) RCN prices have been high in the fourth quarter (b) processing costs are going up in first quarter (c) there is uncertainty about RCN pricing (and movement) in the second quarter. They do not want to sell short unless they get a reasonable premium to cover high costs (and any supply side problems).
Uncertainty of demand trend makes buyers wary as well. They do not want to be carrying long positions at prices which are the highest ever and then see a dramatic drop in demand. At the same time, they need to buy at regular intervals to keep pipeline filled to the bare minimum. This hand to mouth buying will continue to provide floor to the market till we reach a “tipping point”.
There is no change in fundamentals. Supply will continue to be tight in first half – tightness will ease slowly in second half if 2011 crops are good (or at least normal). Normal supply will be restored only if 2011 crops are at least normal AND 2011 demand is dramatically reduced. Steady demand is expected in Asia in 2011 but there is uncertainty about USA & Europe. Some people expect a double digit decline in 2011 due to the high prices but this seems unlikely given that prices for almost all nuts (in fact, almost all food products) are high. Base demand for snack nuts will remain although promotions & special offers may be affected. Unless something dramatic happens on demand or supply side, we expect market to move with 3.75 FOB as middle of range for most of 2011.
If buying from USA & Europe is slow in first two quarters, we will see slight easing of prices when the new crops are being harvested. This would mean processors will be less inclined to pay high prices for RCN (even if kernel prices do not ease, processors will have to target for lower RCN prices to compensate higher processing costs). If 2011 RCN prices are reasonable then we will see further easing of prices in the second half. On the other hand, if there is steady buying with some quiet periods – like what we have seen in the last two quarters – processors will have to buy RCN even if prices are high. In that case, there will be little chance of prices coming down much for most of 2011.
In next few weeks, we can expect bouts of volatility depending on news, reports, rumours about the crops – it will be difficult to separate chaff from the grain. By Apr/May we will have a better picture of supply + demand and then it will be possible to make a realistic guess of market trend. Till then, market will continue to be delicately poised and all factors (including external factors) will have to be watched closely.
Regards,
Pankaj N. Sampat
Cashew market continued to be quiet in week 1 of 2011 – for more than one month now, there has been very little volume traded to USA & Europe although there has been reasonable business with other markets. During the last two weeks, some processors from Vietnam and India sold W320 to USA & Europe at lower levels (around 3.65 FOB) because they do not have prior sales and need to move stocks before new crops start in March.
Despite the limited buying interest, most processors from both origins were quoting more than 15-20 cents higher. They do not have much to sell for first quarter and they are not willing to sell at lower prices for second & third quarter because (a) RCN prices have been high in the fourth quarter (b) processing costs are going up in first quarter (c) there is uncertainty about RCN pricing (and movement) in the second quarter. They do not want to sell short unless they get a reasonable premium to cover high costs (and any supply side problems).
Uncertainty of demand trend makes buyers wary as well. They do not want to be carrying long positions at prices which are the highest ever and then see a dramatic drop in demand. At the same time, they need to buy at regular intervals to keep pipeline filled to the bare minimum. This hand to mouth buying will continue to provide floor to the market till we reach a “tipping point”.
There is no change in fundamentals. Supply will continue to be tight in first half – tightness will ease slowly in second half if 2011 crops are good (or at least normal). Normal supply will be restored only if 2011 crops are at least normal AND 2011 demand is dramatically reduced. Steady demand is expected in Asia in 2011 but there is uncertainty about USA & Europe. Some people expect a double digit decline in 2011 due to the high prices but this seems unlikely given that prices for almost all nuts (in fact, almost all food products) are high. Base demand for snack nuts will remain although promotions & special offers may be affected. Unless something dramatic happens on demand or supply side, we expect market to move with 3.75 FOB as middle of range for most of 2011.
If buying from USA & Europe is slow in first two quarters, we will see slight easing of prices when the new crops are being harvested. This would mean processors will be less inclined to pay high prices for RCN (even if kernel prices do not ease, processors will have to target for lower RCN prices to compensate higher processing costs). If 2011 RCN prices are reasonable then we will see further easing of prices in the second half. On the other hand, if there is steady buying with some quiet periods – like what we have seen in the last two quarters – processors will have to buy RCN even if prices are high. In that case, there will be little chance of prices coming down much for most of 2011.
In next few weeks, we can expect bouts of volatility depending on news, reports, rumours about the crops – it will be difficult to separate chaff from the grain. By Apr/May we will have a better picture of supply + demand and then it will be possible to make a realistic guess of market trend. Till then, market will continue to be delicately poised and all factors (including external factors) will have to be watched closely.
Regards,
Pankaj N. Sampat
Monday, January 03, 2011
Weekly Cashews Update
NOV 6, 2010
After a quiet beginning, week 44 saw further increase in cashew prices from middle of the week (in the last 2 weeks, prices have moved up by 6-7%). Business was done for W240 from 3.85 to 3.95, W320 from 3.45 to 3.55, W450 from 3.25 to 3.35 FOB. Most of the business was with USA but other markets also bought some quantities. Bulk of the sales were for Nov-Jan shipments but some business was done upto Mar/Apr. In the domestic market, prices for brokens have started moving up again.
Tanzania RCN prices moved up further to approx US$ 1625-1650 in this week’s auction. Indonesia RCN prices were steady around US$ 1500-1525 but yields are lower. Initial indications for Mozambique RCN are over US$ 1200 but shipments will not be possible before Jan. Brazil situation is unclear and worrying – arrivals are slow, RCN prices are high and processing is much lower than normal. If there is improvement, this will be known only in Jan.
For the next 2-3 months, we can expect market to remain firm because of Chinese demand for their New Year + Indian demand for the winter/marriage season + high RCN prices + limited replacement availability.
Traditionally, processing in India & Vietnam is low in first quarter – in 2011, this will be further reduced by lower availability of RCN from the 2010 crops. So a drop in demand in first quarter may not have large impact on the prices immediately. If the drop in demand extends into the second quarter and is accompanied by normal weather and good prospects for 2011 crop, we might see softer market and lower prices from the second quarter.
Asian markets are showing growth in usage despite the increase in prices (as Asian markets are a spot market, price movements are reflected in retail prices much faster than in the organized markets in the West). The impact of the higher prices in USA & EU is a big question mark. One view is that there could be a 20-25% decline in usage. If this is true (and this will be known only in second quarter), there might be a big drop in prices when the 2011 crops start and this will change sentiment of the market. Another view is that since the prices of other nuts are also high, decline may not be that much. If the decline is in single digits, we feel that there will not be any big decline in prices UNLESS the 2011 crops are very good. And if the trend of short period buying continues in first few months of 2011, the prices will remain at current levels and this will support RCN prices when 2011 crops start.
The long term outlook depends not only on the impact of higher prices on demand but also the state of the 2011 crops. Until there is some definite and clear indication on these two important factors, market will continue to be delicately poised reinforcing the need for caution. The pattern of buying (frequency and volume) + general food (especially nuts) price trends + financial market trends are other factors to be watched closely.
To sum up, we expect continued firmness for the short term (3 months) + volatility in the medium term (3-6 months) + uncertainty about the long term (6-12 months).
Would appreciate your comments on market situation, views on trend and prospects for coming weeks / month and any other news or information
Regards,
Pankaj N. Sampat
After a quiet beginning, week 44 saw further increase in cashew prices from middle of the week (in the last 2 weeks, prices have moved up by 6-7%). Business was done for W240 from 3.85 to 3.95, W320 from 3.45 to 3.55, W450 from 3.25 to 3.35 FOB. Most of the business was with USA but other markets also bought some quantities. Bulk of the sales were for Nov-Jan shipments but some business was done upto Mar/Apr. In the domestic market, prices for brokens have started moving up again.
Tanzania RCN prices moved up further to approx US$ 1625-1650 in this week’s auction. Indonesia RCN prices were steady around US$ 1500-1525 but yields are lower. Initial indications for Mozambique RCN are over US$ 1200 but shipments will not be possible before Jan. Brazil situation is unclear and worrying – arrivals are slow, RCN prices are high and processing is much lower than normal. If there is improvement, this will be known only in Jan.
For the next 2-3 months, we can expect market to remain firm because of Chinese demand for their New Year + Indian demand for the winter/marriage season + high RCN prices + limited replacement availability.
Traditionally, processing in India & Vietnam is low in first quarter – in 2011, this will be further reduced by lower availability of RCN from the 2010 crops. So a drop in demand in first quarter may not have large impact on the prices immediately. If the drop in demand extends into the second quarter and is accompanied by normal weather and good prospects for 2011 crop, we might see softer market and lower prices from the second quarter.
Asian markets are showing growth in usage despite the increase in prices (as Asian markets are a spot market, price movements are reflected in retail prices much faster than in the organized markets in the West). The impact of the higher prices in USA & EU is a big question mark. One view is that there could be a 20-25% decline in usage. If this is true (and this will be known only in second quarter), there might be a big drop in prices when the 2011 crops start and this will change sentiment of the market. Another view is that since the prices of other nuts are also high, decline may not be that much. If the decline is in single digits, we feel that there will not be any big decline in prices UNLESS the 2011 crops are very good. And if the trend of short period buying continues in first few months of 2011, the prices will remain at current levels and this will support RCN prices when 2011 crops start.
The long term outlook depends not only on the impact of higher prices on demand but also the state of the 2011 crops. Until there is some definite and clear indication on these two important factors, market will continue to be delicately poised reinforcing the need for caution. The pattern of buying (frequency and volume) + general food (especially nuts) price trends + financial market trends are other factors to be watched closely.
To sum up, we expect continued firmness for the short term (3 months) + volatility in the medium term (3-6 months) + uncertainty about the long term (6-12 months).
Would appreciate your comments on market situation, views on trend and prospects for coming weeks / month and any other news or information
Regards,
Pankaj N. Sampat
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