Tuesday, September 09, 2014

and the "season" begins

c/o Henry Stimler

1st week of September has been one of furious action along with furious inaction. Let me explain.

As per last week’s report the market has strengthened across the board and we see it in all current offers on cashews. We have seen another jump by around 10 cents on a product that has consistently been going up over the weeks, we think this price will now stick for a while. There is a number of factors contributing to this price increase. First and foremost is the high price of RCN out of Africa. This high price has caused many Vietnam producers desperate to move product have been selling at a loss, this in turn meant the banks starting pulling credit. Packers now needed to be profitable hence the significantly price increase.

Packers have also slowed down with purchasing RCN to force a price correction. Currently due to these 2 opposing factor there isn't an abundance of stock on the market and since its already the season they know that the demand coming now isn't so high so they can afford this ploy.

We feel that this price is going to stay around for now, and it looks unlikely that we will return to the day of old any time soon, a good indicator is the forward contract pricing we are seeing for Jan and they are rather high.  

Last week was a  slew of depressing doom and gloom emails from farmers,  this week they have been tempered with some rays of light, such as the initial thoughts of 30% damage now seems to be around 15%, this is just on the Non parrel varieties we still awaiting for more accurate reports on the California variety.

Saying that growers are currently off the market completely. This month’s shipment report wont reflect the market due to the fact it’s still old contracts, the real indicator will be the October shipment report which will show us if there is market resistance to these crazy prices. That shipment report will be a better barometer in terms of customer demand. If the shipment report is high then it will show the growers that demand is still very strong which in turn will legitimize these outrageous prices, if not we should expect to see a slight correction which will think/hope will happen.

We are hearing an abundance of rumors of a mammoth crop. Some packers are even predicting a new record and a bumper crop of 300 mill MT+ (combined US/Mexico). Based on this we should see a significant drop in pricing come Jan, and we just have to weather (get it) the storm for a bit longer and we shall see plenty of offers and plenty of movement after the holiday season. Caveat, till that comes about, current year crop can and looks like to continue to go up in the interim.  

One small thing to keep an eye on, though it’s unlikely, growers are saying that with the new process of shelling one is getting a complete nut and less and less pieces (which is good for the farmers) a situation similar to Cashews LP’s. We could see a lack of Pecan pieces and that could spike pricing in the long run.

The Walnut board meeting is today and we should know all we need to know hopefully by tomorrow and will update. Saying that we said last week that harvest looks good and price should take a larger drop from where it was trading as it has already dropped slightly.

Rumors are of a smaller crop this year than previous, we have no real feel back to predict anything, will keep you all in the loop 

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