JULY 9, 2011
In Week 28, there was reasonable activity in all market. Trades and offers were in a wide range e.g. W240 from 4.85 to 5.00 / W320 from 4.50 to 4.65 / W450 and SW320 around 4.50 / Splits from 3,90 to 4.00 / Pieces from 3.80 to 3.90 FOB. In general, selling ideas were at higher levels. Buyers were content to buy limited volumes for nearbys - they were looking for discounted offers for forwards but there were no such offers from reliable processors. Indian domestic market was quiet after a month of good activity during which period, prices moved up about 15-20% for different grades. The next round of domestic activity is expected in August.
RCN market was steady – IVC/Ghana in 1350-1450 range, Bissau in 1675-1725 range, Senegal/Gambia around 1550 C&F. Most of the activity was in resale market. Logistic problems continue – delays in loading + longer transit times. It seems that total RCN shipments from West Africa may be more or less the same as last year (but India’s share will be lower). However in terms of kernel yield there will be a significant shortage, specially for white/fancy grades.
Kernel inventories in the main importing countries are low - buyers have been in market every few weeks to buy “as needed” to keep things running. Due to the high prices, they have been buying small volumes for shorter spreads. Delays in RCN arrivals into India & Vietnam has meant there is lower than normal inventory with shellers and so they have not been under pressure in periods of lesser activity. This trend is likely to continue until supply improves significantly or buyers can reduce buying long enough for shellers to feel pressure to sell.
There are rumblings of delays in shipments from some shellers – some of which might turn into defaults or renegotiation of price. Although this will not reduce overall kernel availability for the second half, it will certainly mean supply distortion (and higher prices if defaulted buyers are forced to buy afresh to fulfill their commitments or requirements).
Unless something dramatic happens, there is no reason to expect any change in the current trend of regular steady buying and firm prices for next few months – we would not be surprised if see some more increase in prices in the third quarter (depends primarily on Asian demand and secondly the need for importing countries to keep buying for nearbys).
It is too early to judge – or even guess – how things will develop for 2012 deliveries. If contracting for 2012 is lower volumes over normal periods, we might see prices softening in the last quarter (especially if the Southern crops are good). If the 2012 contracting is for short periods, that will mean the trend of regular buying every few weeks will continue and this will provide a floor to the market.
Except for Almonds, prices of all nuts (including peanuts) are higher than historical averages. This has not affected consumption too much so far although there might have been some shifts within the category for some end products. It will be interesting to see what impact this has on roaster and retailer strategies for 2012 for nuts in general and cashews in particular. This and the outlook for 2011/12 crops will determine what will be a realistic price band for Cashews by end of the year for first half 2012.
We would like to know your comments on market situation, forecast / views on demand & market trend and any interesting news + information.
Pankaj N. Sampat