Monday, February 22, 2010

weekly Cashew Update

FEB 20, 2010

Cashew market continued to be quiet in week 7 – small volume traded to USA & European traders. Prices drifted few cents lower – W240 between 2.85 and 2.90, W320 between 2.60 and 2.65 and W450 around 2.45 FOB. Off markets and Indian domestic market were also quiet – no significant change in prices.

No fresh news on RCN front – conditions in all origins appear to be normal, except for a small delay in arrivals in India. Physical movements from WA wil start SH MARCH and then, we will have an idea of actual pricing. At the moment, prices seem to have stabilised around 850 C&F for Benin and 725 C&F for IVC.

In the coming weeks, many processors will need to make sales to be able to buy RCN whereas some may decide to wait until they have RCN in hand before making sales. Kernel buyers are content to buy small volumes at each level as they do not see any reason to take large forward cover. This trend is likely to continue unless there is a big change in demand trend or a significant change in supply situation (actual or perceived).

For the time being, it certainly appears that we are likely to see a market with a soft bias as we go into the main RCN procurement season. But the market is so delicately poised and thin (in terms of liquidity) that it would take very little to tip the scale (in either direction).

Potential for volatility is increased due to changes in cashew market structure and trading pattern i.e. (1) increased importance of unorganized spot market (2) reduced forward positions with the major importing countries (3) risk aversion & reduced risk appetite. Added to this is the increasing impact of external factors like (1) currency movements and (2) financial & economic developments which affect inventory management & demand forecasts.

Overall,, it is becoming more & more difficult to judge the trend and predict (or even guesstimate) how things will move.. For this reason, in our last few reports, we have been advocating caution to avoid being caught on the wrong foot by any sharp moves in either direction.

Would appreciate your views on market situation, forecast of demand + activity + price trend for coming weeks and any other news or information

Regards,Pankaj N. Sampat

Monday, February 15, 2010

Weekly Cashews update

FEB 13, 2010

Cashew market was VERY QUIET in week 6. Some business done for W320 around 2.70 FOB by a few processors. No trades reported in other grades. No change in general price level i.e. W240 around 2.95, W320 around 2.75, W450 around 2.55 FOB. With Vietnam on holiday, next week is also expected to be quiet.

Although physical movement of new crop WA RCN will start after a few weeks, offers have come down from a high of US$ 1000 to US$ 900 for Benin, from US$ 850 to US$ 800 C&F for IVC and from US$ 750 to US$ 700 for Nigeria. Some trades reported for all three origins at several levels in this decline but we have to see what prices are actually paid when shipments start. If all crops – India, Vietnam, West Africa – are normal, we can expect some further decline in RCN prices.

For the time being, the kernel market seems to have stabilised. With 70% of the world cashew crop to be traded in next four months, nobody seems to be in a hurry to take any large position. Processors want to see how RCN prices develop in coming weeks before making sales. Buyers are prepared to wait for fresh contracting with roasters and retailers before making new purchases.

If the quiet period continues and if RCN prices decline in next six weeks, kernel prices will drift lower (which would be a good thing as it would induce some buyers to enter the market). But if for some reason, the need to buy kernels emerges before the RCN shipments start, prices might harden a bit.

The change in the buying pattern of the two big markets (USA & EU) and the increased consumption in India & China plus the larger volumes being shipped to other markets are all leading to emphasis on buying & pricing for the short term. This makes it difficult to predict market trend for more than a few weeks and adds to reluctance of processors to make large forward sales unless there is a reasonable cushion to absorb any sudden shocks Uncertainties in the economic situation (leading to changes in cash & inventory management) and currency fluctuations are increasing the potential for volatility.

Overall, it seems that current range is a reasonable level for cashews. Any major move – in either direction – would not be good for the long term health of the cashew business.

Please advise your views on market situation, views & forecast of demand and price trend and any other info / news

Pankaj N. Sampat

Monday, February 01, 2010

Weekly Cashews Update

JAN 30, 2010

Week 4 saw the cashew market stabilising – there seems to be a fair amount of interest for W320 for Feb-Apr shipments around 2.70 FOB. Trades during the week have been in a wide range – W240 from 2.90 to 3.00, W320 from 2.70 to 2.80, W450 from 2.50 to 2.55 FOB. Vietnam has been selling at lower levels than India & Brazil (not clear whether it is to have some sales on books before holidays & new crop or in expectation of a good crop & lower RCN prices after the holidays – or both !)

In the last six weeks, W320 came down by 25-30 cents, W240 came down by 10-15 cents and W450 came down by 10-15 cents.. In the last three months, W320 moved up from 2.70-75 to 3.00 and came down to 2.70-2.80 FOB. This volatility has given reasonable trading opportunities but it has not been much of much use to processors or endusers. There has been no apparent reason for this see-saw except the jump in RCN prices in November

SO FAR, all indications are that upcoming crops will be normal. Some trades have been reported for Benin RCN from 1000 to 925 C&F and for Nigeria around 750 C&F. We feel these are speculative trades and do not reflect prices that will actually be paid. There will be a lot of “information” and speculation about crop prospects in Feb-Apr and this will influence kernel price movements.

Offtake in the importing countries in the last quarter seems to have been normal – no big increases or declines. In the next few weeks, we will see whether roasters need to buy more for first half or not. Also, whether they will start buying for second half now or be able to wait till Apr/May when clearer picture of upcoming crops & RCN prices is available.

Overall, everything points to a steady market in a narrow range (except for volatility due to crop “news” + lower volumes of forward positions). No big moves are expected BUT markets tend to move in a way that nobody expects.

Caution is recommended when markets are as quiet as they are now (and there are so many uncertainties – raw material pricing, timing of finished product sales, currency movements)

Please advise your views on market situation, forecast of trend / prospects / activity in coming weeks and any other information + news

Pankaj N. Sampat