Samsons Traders

After almost a month of deathly quiet, there was some activity in Cashew market in Weeks 9 and 10 triggered by low offers from a few processors.  These were quickly picked up by US &  European traders.  Indian domestic market has been extremely quiet for almost a month now – traders in consuming areas report slow sales of high priced Indian product due to good availability of cheap imported kernels.

For the last two weeks, there has been a wide range of prices – offers as well as trades – but very few processors were selling at the lower end of the range. Most processors are at higher end of the range and some are not offering at all.   Range of prices is W240 from 3.85 to 4.00, W320 from 3.30 to 3.45,  W450 from 3.05 to 3.15, SW320 from 3.00 to 3.10, SW360 from 2.80 to 2.90,  Splits from 2.10 to 2.20, Pieces from 1.40 to 1.50 FOB.

On the RCN side, Tanzania has been able to sell most of its crop without any significant price movement.  West African crops seem to be progressing well but logistics will continue to be a concern (fingers crossed !!). Prices are steady in the range of 900 to 1050 C&F depending on origin & quality but a realistic price range will be established only when movements start – end of Mar/beg of Apr.  Pricing will depend on the activity of Brazil processors who are facing the problems of a very bad crop and Vietnam processors who are seeing very high prices for domestic RCN.  The RCN market opened high in Vietnam after the TET holidays and has moved up further in the last two weeks.

On the kernel side, buyers have been successful with periodic buying of small volumes for short spreads  – and this has suited most shellers too.  This pattern has kept the market moving within a reasonable trading range of about 30 cents. At any given time, buyers have been able to pick up some volumes at the lower end of the range for nearbys – so they are not scared of keeping some portion of their needs uncovered.  Also, large shellers have been able to sell to some buyers at the higher end of the range by taking positions for few months ahead – so they are not under pressure to reduce prices to get additional sales.

As we have discussed in earlier reports, slow movement and lower prices for brokens is becoming an increasing drag on the industry. Indian shellers who were so far relatively well placed are also feeling the pinch now. This issue needs to be addressed by all links in the chain.  If the offtake and prices for lower grades do not improve, either the RCN prices have to come down or the prices for wholes have to move up in order to avoid parity problems.

We can expect some volatility in the kernel market during Mar to May – whether it will have an upward or downward bias depends on (1) West Africa RCN pricing and movement (2) timing & intensity of kernel contracting for second half of the year.  The reported forward sales by traders gives them ability to buy regularly which will provide a floor to dips.  The need of some shellers to keep selling at regular intervals will limit the spikes.

If there are no issues with RCN movements and if there is no big kernel buying in this period, we could see kernel market settling in the lower half or middle of the current range.  If the RCN prices remain high during Mar/Apr, we could see kernel prices stay in the top half of the range. In either case, there are good chances of some gradual increase in kernel prices (and offtake) in second half of the year.

Regards

Pankaj N. Sampat

SAMSONS TRADERS

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