Monday, August 30, 2010

Weekly Cashews Update

AUG 28, 2010

Cashew market was very quiet in Week 34 but continued to be firm. Some business was done for W240 around 3.50 and W320 around 3.30 FOB. There was no activity with main markets – probably because most Indian processors were away for Onam holidays this week.

No fresh news expected in the RCN market in the near future – spot market likely to remain firm due to limited replacement possibilities. Tanzania shipments likely to be delayed due to increased procurement by local processors. Time gap between RCN buying by India / Vietnam processors is increasing.

There has been a fair amount of activity in the kernel market during Aug and more is expected in Sep/Oct. Generally, business in this period is for long spreads but this year it is uncertain what the trend will be. High prices might keep buyers away from making long term commitments. Also, processors will be reluctant to make big forward sales unless they get a “risk cushion” because there is nothing on the horizon to signal a change in the firm, upward trend.

To answer the question whether the high prices can be sustained (or when the trend will change), we can look at the medium term (past and future).

The price rise in June 2008 (when W320 crossed 3.50) was sudden (in couple of weeks) and the main reason was defaults of large volumes contracted at lower levels. The current price rise (to current level of 3.30 with some upside still left) has been gradual (over a period of more than 15 months) and supported by steady spot / nearby demand (and higher RCN costs).

The price drop in Oct 2008 was caused due to external factor – financial crisis leading to cash crunch, downsizing of inventories & operations in major importing countries. Although current economic situation is not “great”, it is nowhere near the depressing 2008 (although nobody can predict what surprises the financial markets can throw). Excluding this, the only reasons for a price decline (or change in trend) could be (a) big drop in usage or (b) big increase in availability.

A big increase in availability can happen only if Northern crops are good. (but this will be known only in second quarter of 2011). If the crops are good and RCN prices decline, we could see kernel easing to 3.00 level (maybe lower if the kernel prices decline from current levels before the crops start).

A big drop in usage is possible if retailers and large brands move away from cashews due to the high prices. If this move happens end 2010 or early 2011, prices will start drifting lower and could go below the 3.00 level (maybe lower if the reduced usage continues into mid 2011 when the large Northern crops are being collected). If usage does not reduce in FH 2011, prices will continue to be firm.

Since both possibilities are six months away, market can be expected to be firm in the short term with spot / nearby demand lending support at current level. Any large buying in Sep/Oct will lead to another jump in prices. Quiet period in Sep/Oct would mean prices drifting to lower end of the recent range. Overall, uncertain times ahead !!

Pankaj N. Sampat

Monday, August 23, 2010

Pistachios market update

Most grower/packers have not been doing much business as they feel the market will go up. Harvest is going to be delayed 2+ weeks so earliest shipment will be end of Oct.

I have seen some quotes at the $3.90/lb for R/S US X #1 Pistachios done two weeks ago.

I had another quote at $4.00/lb for R/S US X#1 last week.

It appears that some rumors find this crop to be the on year with estimated pounds around 400 million so bigger than last years, Iran is coming in also with a 400,000,000 pounds. Together you got 800,000,000 pounds usage is about
a billion
it's really does not look a like they have enough to finish a the year.
Paramount claims to be booking lots of business both domestic and export

Weekly cashews update

AUG 21, 2010

Cashew market was quiet in Week 33 but undertone continued to be firm – price range moved up a few cents i.e. W240 between 3.40 to 3.45, W320 between 3.25 to 3.30, W450 was 3.10, SW320 around 3.10 FOB. As we have seen in the last few weeks, some processors sold below this range and some were able to sell few cents higher - the difference between lowest and highest price continued to widen.

RCN market is steady – afloat parcels being traded between 950 to 1000 for IVC and around 1200 for Guinea Bissau. Indonesia new crop being quoted around 1500 C&F with reports of bad weather in some areas. No significant news from East Africa or Brazil.

In last few weeks, there is steady demand from “off markets” which buy spot / nearbys and pay few cents more to regular suppliers for quality and reliability. Traders in USA & EU have also been buying regularly – either to cover short positions or to have something on books to be able to offer when endusers come in to buy. Market seems to be comfortable with this trend – at least for the time being. Forward cover / sale position is limited and as prices continue to climb, the risks are becoming bigger (for everyone in the chain).

Processors expect good demand in the next six weeks and are prepared to wait - each round of buying (so far) has seen some increase in the price range. They are not in hurry to sell because there is no replacement RCN to be bought before Nov (except for limited quantity of high priced Indonesian in Sep/Oct). So, general feeling is that there is room for some price increase in this period.

With the prices being high, the question uppermost in all minds is whether these levels can be sustained next year. The feeling is that if prices are at / higher than current levels at the end of 2010, then the 2011 crop RCN prices will open high and there will be little chance of a significant price decline for quite some time, although there will be periodic dips. We can expect 2011 RCN prices to open at lower levels only if there is a significant decline in kernel prices by end 2010/early 2011.

Prices of many food commodities are higher than recent historical average. As far as nuts are concerned, good demand growth for most nuts and short supply in some nuts is likely to keep prices high (with some dips depending on growers/processors need to sell during periods of low buying interest). Unpredictable external factors can throw surprises but no changes are expected in the fundamental factors for cashews in the near future to change the trend. At some stage, the trend will change (either on fundamentals or sentiment) and we will see realignment of price range but it is difficult to judge when and at what level this will happen.

Comments on market situation + views / forecast of trend for coming weeks + any interesting info or news would be appreciated.

Pankaj N. Sampat

Thursday, August 12, 2010

Walnut market update August 12, 2010

R.L. “Pete” Turner August 12, 2010



On July 27th the California Walnut Handler Coalition set the “subjective” walnut crop estimate at 473,000 tons, up 8% from last years record crop of 436,000 tons. The official NASS “objective” crop estimated will be out on September 3rd.

The Handlers forecasted the Chandler’s at 186,000 tons, up 12% and Hartley’s at 60,000 tons, down 3%. Tulare’s are up 9% (55,000 tons) and Howards estimated at 53,000 tons, up 10%.

Because of the large crop (projected), many growers/packers feel undersize may be an issue. As an example, some Howard orchards appeared to have higher percentages of smaller walnuts from the second and third sets and it is questionable if they will reach size maturity by harvest.

The weather in the major growing regions continue to be favorable and most believe the quality of this years crop will be above average. In any event, it certainly should be much better than last year’s below quality crop.

Based on the fact that most of California’s other agriculture crops had a late harvest, we are projecting the walnut harvest to be 7-10 days later than normal. However, it usually catches up by the first week in October so should not have too much effect on the mid-varieties (Chandlers, Hartley’s, Tulare’s and Howards’s). However, logistically, it will put pressure on the harvest structure as most of the harvest will come off at the same time.

July shipments were 19,817 tons (inshell equivalent) 6,329 tons less that last July shipments. Total year to date shipments are 444,192 tons compared to 369,401 tons last year. If my August projections of 25,000 tons are correct, we will go into the new crop with a 26,000 ton carry-over. This will give the industry about the same total available tonnage we had last year.

California Walnut Shipments Recap (000)

Month (July) 2008/09 Year to Date 2009/10 Year to Date Percent

Inshell (lbs.) 1,366 172,906 692 205,073 18.6%

Shelled (lbs.) 23,171 257,482 16,978 297,923 15.7%

Total Tons
(Inshell eqv.) 26,146 369,401 19,817 444,192 20.2%


New crop Inshell business (Chandler) seems to be a little heavier than normal but expect it to taper off as we get closer to the official crop estimate.

The shelled market has firmed somewhat with Chandler Halves and Pieces trading at $3.85 and Regular Light Halves and Pieces at 3.65. Combinations Light Halves and Pieces seem to be firm at $3.40 with Medium and Small material at or slightly less than the Halves and Pieces market.

The walnut handlers will announce their opening prices on September 10th. and expect they will be higher than last years opening.

Please let me know if you have any questions or comments.

Kind regards,


Monday, August 09, 2010

Weekly cashews update

AUGUST 7, 2010

Cashew market was quiet in week 31 – some processors in India & Vietnam sold W320 few cents lower than last week. But in general, price levels were unchanged – W240 between 3.30 and 3.35, W320 around 3.15, W450 between 2.95 and 3.00, SW320 around 3.00, SW360 around 2.80, Splits/Butts between 2.65 and 2.70 FOB. Large processors in both origins were not willing to accept bids at lower levels – either nearbys or forwards.

RCN market was steady with afloat / spot parcels of IVC being traded around 950 and GB around 1150 C&F. It is too early for East Africa news (except that it is more or less certain that Tanzania will increase export duty). Prices for early shipments from Indonesia are very high.

Here are some figures for the main Asian suppliers :

FH 2010 FH 2009
Vietnam Production (est) 300,000 350,000
Vietnam Exports 79,730 69,250
India Production (est) 450,000 500,000
India Imports 347,100 334,700
India Exports 51,930 51,740

RCN imports into India in SH 2010 will be lower due to lower overall availability (estimates of shortage vary from 5 to 10%) and more imports by Vietnam due to a smaller crop there. Kernel exports in SH 2010 are also expected to be lower due to lower availability in both origins PLUS strong domestic demand in India.

Although usage in some markets in 2010 will be lower than 2009, overall usage is unlikely to be affected due to good Asian usage. So, these figures lead us to believe that end of 2010 will see lower than normal inventories – especially in the major importing countries which have been buying few months needs at a time. Supply tightness will ease in SH 2011 only if 2011 Northern crops are good (above normal). OR if there is a big drop in usage in FH 2011 !!

Looking at these fundamental factors + peak consumption in Asia in Aug-Nov + pattern of regular buying by USA & Europe for few months at a time, we can expect good activity in next 2-3 months. There does not seem to be much chance of a price decline in 2010 although there may be small dips when market is quiet. We might see a price decline in 2nd or 3rd quarter of 2011 but that will depend on the 2011 crops and FH 2011 usage. The only other reason for a reversal of current firm trend would be external factors (economic and financial situation) or a big drop in prices of other nuts.

Although we are not overly bullish about the long term (too many variables and change in market structure make it difficult to predict trend beyond a few months) we do feel that market will continue to move around the current levels with possibility of some price increase in the next 2-3 months – any dip in the meantime would be a opportunity to cover part of the needs (at least for next 2-3 quarters).

Would appreciate your comments on market situation, views & forecast of demand + market trend and any interesting news / information

Pankaj N.