Tuesday, September 16, 2014

"Copy and Paste" week

c/o Henry Stimler

Compiling this week’s report could be as easy as copy and paste from last week’s report but being a consummate professional I will attempt to write pretty much the same thing as last time with a hope of coming of not too repetitive.

Saying that, it is very much the same. Prices have only continued to go up on certain items and the rest we do not have clarity to give any real updates. Here goes.

Prices continue to go up as we have seen for the last few weeks. The rise has been in $0.05 to $0.15 increments. This has to do with the high price of seed. Saying that we don’t feel this is going to turn into a runaway commodity. Till Jan pricing is expected to go up and then post that the price should settle down, much like last year. The cause for the price increase as per last week is that the Sheller’s can no longer mix cheap seed with current seed since all has been used. We should see post Jan the price of new seed come down which will bring pricing down.

Pieces Market is a completely different fish. As we have kept saying for weeks, now that the ability of the Sheller’s to get unbroken cashews means less and less pieces yet the demand for pieces is still very much there. So when you have an actual physical shortage expect prices to keep going up.

More of the same, as I said last week, the shipment report will not be a good indicator and even though it’s a tad lower than last year it didn’t make a spot of difference. Prices continue to be very high. The growers are beyond nervous, on the one hand with the reports of crop damage rumors of now upcoming needed rainfall for next year’s crop legitimize these high prices BUT on the other hand if the almond prices just continue to go up the blow back is going to be enormous, reminiscent of 20 years ago when Peanuts got to high and were replaced by Almonds (I was 16 at the time and it was traumatic). Large conglomerates will just abandon Almonds in its products and the damage would take years to rectify. Growers are sensitive to this and are trying to act in a responsible manner. This along with the tremendous volatility we are seeing makes it very hard to call but we can only speculate that post Jan we will see a price correction.

Prices are staying where they are. Market is high and dry, very little product floating around, the harvest will miss the season since its scheduled for November 15th meaning no deliveries till December and the bottleneck pipeline will take time to filter down but as we said prior post Jan we shall see a good price correction.

Not enough info a this current time.
Same, waiting on the market to stabilize 

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