Monday, May 12, 2014

Cashew Market Update

1- Vietnam crop: the crop continue in other center provinces (a bit further North), but it is small crop and price is getting higher than before. Dry raw seed traded around 24,000-25,000 VN$ per kg for 30% outturn (Vietnam calculate %). Comparing to African seeds, price is still more attractive than African seeds because transportation cost in Vietnam has gone up very much. But the disadvantage is that you have to pay money up front, full amount, while with African seeds you can only deposit 10% to open L/C and only pay after
45-60 days when cargo arrive.

I think lack of finance is the main reason for raw seed price is reasonable in Vietnam.

But in general, price is up 25-50 USD per tons if we compared with same quality as before.

2- African crop: 
- Ivory Coast: it is raining and quality is getting down. I think up to now the IVC government has been successful keeping the minimum price. With strict control like cancel export license and cancel local buying license, they remain same minimum buying price although out turn is less. There has been few meeting between IVC cashew board and exporters. Exporters try to convince the IVC government that out turn is now less (46 lbs) compared to before around 49 lbs so minimum price should revise. But IVC does not agree, they still remain same minimum price. Indian and Vietnam have been waiting and hoping for price to come down, but they cannot wait for too long, so India and Vietnam start to pay the price, raw seed begin to move up. This year, raw seed is moving more to India than to Vietnam.
Shipment from IVC is quite slow because of congestion. Formality is also very slow. Exporters complain that everything is slowdown in IVC, very difficult to have containers, very difficult to have space on the vessel, trucks have to wait for so long to have space in warehouse....
In general they say crop is okay, but if they cannot ship out fast, quality can be down as the rain is coming.

- Other origin: price also follow IVC price, so it is going up too around 30-40 USD per tons.  Most my medium raw seeds traders are complaining that business is getting more and more difficult because big group of companies entering the market and spoil the market, pushing them to take position.

3- Processing: monsoon season is coming, so sometimes there is small rain, moisture will become higher from small/medium factories if they face the rain. So during June, when there is more rain, I think quality will be down from small/medium packers. Processing is getting better in Vietnam because after harvest, workers will slowly returning to work.

4- Domestic market: Performance of LP is having problems. 1.75-1.78/lb fob level. Demand for LP is quite good.  I think in domestic market, price will be even up more by end of May, because many exporters have over sold, so by end of June they will need to cover to ship. Why exporters have over sold??? I think the main reason is that they always sell based on current domestic market level. But when buyers feel that price has reached the bottom level and begin to book many, price will be up immediately. Exporters (traders) do not know about this, so will get stuck. Only processors who have raw seeds in the warehouse can avoid this problem.
Recently there are so many exporters who do not process (exporters with just packing centers, who does not have a chimney in their factories), they only buy from small processors, do some re-grading and pack in their brand. There are too many of those, so competition is very tough.

5- Western market: by end of April and early May. Market is more active as western buyers are buying. During these days, Western market continue to buy more May and June shipments, so price is moving up.

At current market of raw seeds imported from Africa, packers will need to sell higher than this level to make money.

It seems like market is on the up side, especially LP from a high quality packer.  If you have needs for forward contracting, please contact us and let us know how we can help.

-Thomas Kim

Thursday, May 01, 2014

2014 USDA Subjective Almond Crop Estimate

USDA has released 2014 almond crop estimate, subjective.

The subjective forecast for the 2014 California almond production is 1.95 billion pounds. This is 2.5 percent below last year's production of 2.00 billion pounds. Yield is expected to average 2,270 pounds per acre, down 4.6 percent from the 2013 yield of 2,380 pounds per acre.  Forecasted bearing acreage for 2014 is 860 thousand. The subjective production forecast is based on a telephone survey conducted from April 15 to April 29 from a sample of almond growers. After the warmest winter on record for California, the
almond bloom began in early February. The 2014 bloom was one of the earliest almond blooms in memory.
Orchards required irrigation in the winter months due to the lack of precipitation, but rain early in the season offered some temporary relief. Pest and disease pressure has been lower than last year. Overall, the 2014 crop is developing faster than last year and harvest is expected to start early. Water is a concern for many growers this year.

The short version... it's just what we expected.  While the prices of almonds will not "shoot for the moon", we're also not going to see it crash(as buyers were hoping).  The market will remain stable and seller/buyer will be paying close attention as we get closer.  Look to the objective estimate from USDA(which is more accurate) on June 30,2014 12:00PM

-Thomas Kim