Weekly Cashews update

MAR 12, 2011

Cashew prices moved up a few cents more in week 10 – business was done for W240 around 4.35 / W320 around 3.95 / W450 around 3.75 FOB / WS around 3.40 / LP around 3.20 FOB. Even at the higher levels, selling interest was limited. Activity in Indian market picked up – specially for brokens.

RCN arrivals continue to be slow and prices are high. Clearer picture of RCN price trend will be available in April but it certainly seems that RCN supply in India and Vietnam will be tight for couple of months (maybe more if a viable alternate route for movement of IVC RCN is not found quickly). Until shellers have covered a reasonable quantity of RCN – physically – they will be reluctant to make any large kernel sales because of the uncertainty of supply despite the high prices.

Kernel buyers seem to be content to buy small volumes at regular intervals on hand to mouth basis. They are probably waiting for prices to come down before making any large purchases to replenish depleted inventories. For the time being it does not seem if supply will become comfortable soon. Till then, the continued buying for nearbys will support the market.

Even if the RCN flow picks up in April/May, initial prices will be high as most sellers are running out of stock. We might see a softening of RCN prices in June/July but that may not have immediate impact on kernel prices UNLESS kernel offtake in the next 2-3 months is very low and buyers are able to extend their limited inventories for few weeks more. A significant downward move in prices is possible only if during second quarter, the RCN flow is normal AND the kernel demand is very low. If supplies pick up in third quarter it may not lead to lower prices as the third quarter is the peak buying period for all markets (including the largest consuming region – Asia).

Outlook for second half of the year continues to be hazy but everything points to a tight supply and firm market for next 2-3 months (this might continue into third quarter if the RCN flow does not pick up in second quarter).

Overall, the continued uncertainty is making everyone cautious – resultant limited forward cover (both sides) will make the market more susceptible to price swings on either side depending on demand pull or supply push.

WOULD APPRECIATE YOUR COMMENTS ON MARKET SITUATION PLUS DEMAND & SUPPLY FACTORS, VIEWS + FORECAST ON MARKET TREND AND ANY OTHER NEWS / INFORMATION

Regards,

Pankaj N. Sampat