OCT 20, 2012
During weeks 40 to 42, there was reasonable activity with USA & EU buyers for shipments upto Feb/Mar shipments (there were stray sales for later positions as well). Trades were mainly for White Wholes – other grades continue to be neglected. Most of the activity was from India – we did not hear of any significant trades or offers from Vietnam. Activity picked up in Indian domestic market with slight improvement in prices for good quality product. In Vietnam, China was slightly more active than the last few weeks.Except for a slight narrowing of gap between high & low offers for wholes, there is hardly any change in the price range established in the last several weeks. Higher offers were not taken up. Price range was W240 from 3.60 to 3.70, W320 from 3.20 to 3.35, W450 from 2.95 to 3.05, SW320 from 3.00 to 3.10, SW360 from 2.75 to 2.90, Splits from 2,00 to 2.20, Butts from 2.10 to 2,25, Pieces from 1.55 to 1.70 FOB.
Prices for West African RCN came down a bit reflecting increasing deterioration in quality. Indonesia RCN is trading around US$ 1300 to 1325 C&F with most of the sales so far being to India. No news yet from Tanzania regarding commencement of auction or movement. Situation in Brazil does not seem to be good.
Most of the kernel buyers continue to buy smaller volumes for shorter spreads. Given that current prices are quite “reasonable” compared to the highs that we have seen in the last 2 years, it is quite surprising that they still do not have confidence to increase volume or period of cover. In fact, the interest for forward cover is much lower than normal and is even lower than the cover when prices were higher which we find difficult to understand.
In our reports in March 2011 and July 2012, we had attempted analysis of price movements for last 5 years to see if there was any annual pattern. Conclusion was that there is no fixed period in the year for peaks & troughs. In some years, prices went up during the main harvest. In some years, prices went down before the peak consumption period. We could not find any annual pattern or trend. BUT, we noticed two things :
1) In all the 5 previous years, prices during Sep/Oct (after the main harvests) were higher or equal to prices in Mar/Apr (beginning of main harvest).
2) At the end of all the 5 previous years, prices were equal to or higher than prices at the beginning of the year.
History need not repeat itself – especially not in markets which are faced with so many variables and uncertainties. During 2012, prices spiked up for a brief period during the early part of the harvest and then started drifting down. By Sep/Oct 2012, prices are around the same levels as Mar/Apr 2012 (approx 3.25 FOB for W320) before the spike in late Apr/early May. Will the prices in Dec 2012 be same / higher than Jan 2012 (approx 3.50 FOB) ?
We feel that downside from current levels is limited, considering that current prices are lower than last 2 years average + close to average of last 5 years + processing costs have gone up significantly in the last 3 years + prices for all treenuts are higher than medium term historical average. At the same time, we do not see any reason for a big jump in prices considering the uncertain economic situation + lack of confidence in retail off take + comfortable supply (maybe in the wrong place and form !!).
Overall, we can only expect that for the next few months, market will continue to move sideways with a slight bias towards the higher end of the current range, unless something dramatic happens – and that is something which nobody can foresee !
Please inform your comments on current situation, views & forecast of demand + market trend, any interesting news or info…. and your interest
Pankaj N. Sampat