Weekly Cashews Update

FEB 12, 2011

Cashew market was steady in Week 6 with a firm undertone. Small increase in prices – W240 around 4.35, W320 around 3.85, Splits & Butts around 3.25 and Pieces around 3.05 FOB. Activity was limited because processors were not keen to sell at current levels and buyers do not seem to be in hurry to buy.

There is no fresh news from the RCN side – no adverse reports from any origin except for the earlier discussed delay in arrivals in Vietnam & India and the concern about IVC movements.

Processing in Feb-Apr will be lower than normal due to lower availability in 2010 and delay in 2011 crops. If the offtake in first quarter is not significantly lower than previous years, this could probably lead to a very tight supply position in the seoond quarter. And if buyers need to buy for second quarter, they will have to pay higher prices as availability is limited.

If kernel prices do not come down in the next 6-8 weeks, there is very little chance for lower RCN prices. If offtake drops substantially in first quarter, kernel buyers may be able to keep away from the market for some time. Reduced activity in kernel market may mean that shellers may slow down their buying unless RCN prices come down. But the fact that RCN stocks are low and 2011 arrivals are delayed may not allow them to wait too long as they have to keep factories running.

It seems that the pattern of nearby kernel activity is here to stay for some time. This will mean that there will be always be someone in the market and this will provide steady support to the market. Shellers will be content to sell small volumes at regular intervals. There will be no pressure on them to reduce prices unless RCN prices come down. Price trend will change only if supplies in 2011 are normal and if the buying for nearbys is significantly lower in the second quarter.

Overall, we continue to feel that the market is very delicately poised. Pricing of kernels for long term will be difficult until there is some more information on kernel offtake and RCN pricing. A realistic view on the trend for 2011 can only be formed in Apr/May. Till then, market will have to be prepared for volatility with a bias towards firmness unless kernel demand is very slow in next 2-3 months.

Regards,
Pankaj N. Sampat