NOV 3, 2012
Cashew market was steady with a firm undertone in week 44. There was reasonable activity with Europe & USA and some sales were reported to off markets as well. There was usual burst of pre-Diwali activity in Indian domestic market – things will probably be quiet for a couple of weeks before buying for the wedding season starts after Diwali (mid Nov). There were reports of slightly more Chinese buying in Vietnam.
Prices were more or less the same with slight improvement in some grades. Range during the week was W240 from 3.75 to 3.85, W320 from 3.25 to 3.35, W450 from 3.10 to 3.15, SW320 from 3.30, SW360 from 2.80 to 2.90, Splits from 2.10 to 2.20, Butts from 2.15 to 2.25 and Pieces from 1.60 to 1.70 FOB.
RCN prices in Indonesia came down a bit to about 1250 to 1275 due to end of the Indian demand for first crop good quality RCN for early shipment to meet festival demand. Fair amount of West African RCN has been traded in the last 2-3 weeks which is a good sign in the sense that product will start moving to where it is required. No news yet from Tanzania about prices or movement. We do not have much news from Brazil but we hear that industry is grappling with low crops, low yields from African RCN and high processing costs.
During October, we saw reasonable kernel buying from Europe & USA – most of it for shipment upto Mar/Apr and some up to June. This means buyers are probably comfortable with current levels and willing to take on some cover for next year. BUT the volume traded has been lower than normal which could indicate (1) volumes contracted with retailers has been lower or for short spread like last couple of years as there is still no confidence about demand trends or (2) buyers feel prices could soften or at least remain around current levels and so there is no hurry to buy.
On the supply side, except for Tanzania pricing and timing of movement, there is no major news expected till Feb/Mar. Shellers are not very keen to sell large volumes for forwards unless they get some premium over current prices. The feeling is that without a significant fall in RCN prices there is limited downside to the market but there is some possibility of a slow increase if demand picks up end of 2012 or early 2013. Most shellers have high priced inventory and are not likely to be in hurry to sell unless there is big fall in demand or significant decline in replacement RCN prices.
It is quite possible that retailer offtake in the last quarter could be on the lower end of the contracted range since prices for 2013 are probably lower than prices contracted late last year and middle of this year. This might lead to bare minimum inventories at end of 2012 and a smart pick up in first quarter offtake. If this demand cannot be met by kernel stocks in consuming countries, this could mean increased buying – and probably higher prices – at the wrong time of the year.
To sum up, we do not expect any major change in the recent price range of 3.15 to 3.40 for next few months. We believe prices will be steady around the higher end of the range with some possibility of breaking the higher end in Dec or Jan. We feel that market going below the current range is unlikely unless the activity in next 3-4 months is very very slow.
What do you think about current market situation ?
Would appreciate your views & forecast of demand + market trend, any information or news….. and your interest.
Regards,
Pankaj N. Sampat
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