After a very quiet Week 4, there was reasonable activity in the Cashew market in Week 5. Prices for several grades moved up but the rise in W240 and W320 was relatively more with hardly any offers at the lower end of the range. Indian domestic market was steady with not much change in the price of broken grades.
There was reasonable activity in RCN market as well during Jan. Stocks of 2012 crop are being picked up briskly in the range of 850 to 1100 depending on quality. Tanzania is steady around 1325 to 1350 with rumours of lower quality trading 50-75 dollars lower. Mozambique is trading around 900 dollars.
So far, everything looks okay with 2013 crops but as usual, there will be lot of “news” in the next few weeks. There will be the usual rush to buy early arrivals (more so with Brazil looking to be an important player). And logistics will continue to be a concern. There are some numbers floating in the market – around US$ 900 for Nigeria, US$ 1000 for IVC and US$ 1050 for Benin/Ghana but until physical movements start, all prices should be taken only as indications, not actual prices.
On the demand side, there are reports that offtake in the last quarter in all markets was decent (although not spectacular). Beginning of the year has seen reasonable activity from all markets (although the biggest importer – USA was less active than others). Some of it is inventory replenishment or cover for next few month and some is position building. However the volume of business done so far for shipment April forwards is much lower than normal reflecting the trend of the last 18 months or so when business has been done for smaller trances for short periods.
There is a strong feeling that if there are no major surprises on the supply side and prices remain within a reasonable range, there could be a good growth in usage in all markets. And this could lead to a gradual rise in prices in the second half of the year. But, nobody expects a big jump unless there is some big problems with the Northern crops which seems unlikely at this moment (fingers crossed !!)
On the other hand, downside from current range is limited because (1) processing costs will not go down (2) not much chance of a big decline in RCN prices even if the 2013 crops are normal in view of 2011/12 shortages (3) prices of almost all nuts have been on gradual uptrend – except Almonds which have risen sharply (4) recent weakness in USD should help buying decisions in most markets. Joker in the pack is economic situation – if the recent trend of stability in most economies and small growth in others changes to another decline, that might adversely affect the plans of retailers.
During the next few months, we can expect some volatility depending on crop “news”. Hopefully, things will not go out of hand like 2012 when the jump in Apr/May sent wrong signals and higher prices could not be sustained. Another thing that the industry needs is liquidity in lower grades and narrowing of price differentials.
Over all, our feeling is that prices will move in current range with bias towards the higher end of the range with a strong possibility of a gradual increase in the second half.
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Pankaj N. Sampat
SAMSONS TRADERS
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