Monday, March 28, 2011

Weekly Cashews update

MAR 26, 2011

Cashew market was quiet in Week 13 after two weeks of good activity in all markets. This week, buyers were bidding 5-10 cents lower but there was no selling interest at the lower levels. Stray business was done for W240 around 4.45, W320 around 4.05, SW320 around 3.80, Splits around 3.40 FOB. Some markets paid few cents higher for W240 and W320. Indian domestic market has been quiet for almost a month and inventories at consuming centres are running low - activity is expected to pick up in April.

RCN market is steady – Benin around 1600, Ghana & IVC around 1450, Nigeria around 1400 C&F. Shipments from Nigeria & Benin have started. Ghana/IVC shipments expected to start soon. Shellers hope that movements of RCN in IVC – and more importantly, shipments to India & Vietnam – will pick up in April and provide relief from the tight supply & high prices. Unseasonal rains in Vietnam are causing concern. Drying is a problem – this will affect kernel yield. Crop size may also be lower if rains do not stop. Situation needs to be watched closely.

Due to the late crops in India & Vietnam and slow shipments from West Africa, processing in Apr (and maybe even May) will be lower than normal. This could lead to squeeze in kernel supplies in the second quarter UNLESS the offtake in first quarter is much lower than normal.

For the time being, there seems to be nothing that will change the trading pattern – everyone in the chain will continue to operate for the short term & refrain from taking any large forward positions. This means that there will be regular bursts of activity followed by some quietness. Each burst will mean a dip or spike in prices, depending on who / what initiates the activity. This pattern will keep the market moving around the current range unless there is some big improvement in RCN flow or there is a big kernel demand.

As discussed earlier, a trend change will happen only if there is a big drop in offtake in several markets together OR there is a sudden pressure of RCN arrivals (or there is some big external development). Otherwise, it will take several months for supply-demand balance to be restored and prices to soften from the current levels.


Pankaj N. Sampat

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