SEP 10, 2011
Week 37 was the sixth consecutive quiet week in the Cashew market. Despite this quietness and sales at lower levels by some processors in Vietnam, most processors in India (and many in Vietnam) are not willing to reduce their prices. Business has been reported from Vietnam for W240 around 4.75 and W320 around 4.40 FOB. Prices from India for W240 around 4.85-4.90 and W320 from 4.55 to 4.60 FOB – stray business was done by some processors. This wide range of prices is distorting the market and making buyers wary of taking on large positions although they are picking up the lower offers.
In the Indian domestic market, there was limited business by a few processors but in general, market continued to be quiet. Wholesalers and stockists seem to be waiting for signals of retail offtake at the beginning of the peak consumption season before taking on additional volume.
On the RCN side, there are some stocks in Guinea Bissau but the stockists are holding on for high prices. The upcoming Southern crops are expected to be normal – although there are reports that adverse weather may affect the crop in some regions of Indonesia. Current price in Indonesia is very high – approx US$ 2000. The next six weeks will provide a reasonable idea of the crop prospects and prices in Indonesia & Brazil. Tanzania prices will be known by end Oct/early Nov. Mozambique RCN prices will not be known until Dec.
The market is in stalemate mode. Activity in the kernel market in the next 6-8 weeks will determine what direction the market will take.
If the kernel demand before end of Oct – either India/Asia or USA/Europe – is good, prices will remain in the current range. If demand in BOTH regions is normal to good, prices could move up a bit. In either case, RCN prices will not decline (since availability till next March is limited). Consequently, a change in price trend will be possible only in second quarter of 2012 provided Northern crops are good and supply becomes comfortable.
On the other hand, if kernel demand in both regions is slow for the next six weeks, prices could start drifting lower from end of Oct – more so if the Brazil crop is good. If this happens, shellers will be slow in buying, leading to lower RCN prices. And that will mean the year will end with higher than normal inventory – most probably in the form of RCN – with a potential of further downward pressure on prices if the 2012 Northern crops are good or even normal.
It is impossible to judge what will happen in the medium term, especially in the current situation when there are so many economical and financial uncertainties in USA & Europe. But the general feeling is that demand in Sep/Oct will not be so low as to trigger a price decline immediately. Indian demand may not be strong but since India is predominantly a spot market, there will certainly be steady buying during the peak consumption period upto end Dec / early Jan. Following the trend of short period buying, USA/Europe will also have to buy some volume in the next 6-8 weeks for late 2011 / early 2012 shipments. These two demand side factors will support the market and trend will change only if 2012 crops are normal to good. Only a dramatic fall in kernel buying in Sep-Nov could lead to lower prices before that – and that is possible only if there are some big negative developments in USA and Europe economies / financial markets.
Would appreciate your comments on current market situation, your views on trends & prospects and any specific news or information
Pankaj N. Sampat