The Cashew market which was steady for several weeks was slightly softer in Weeks 16 & 17. Prices for Whole grades were at the lower end of the recent range while broken grades moved up a little. There was some pickup in activity in Indian domestic market with some increase in prices for good quality product.
During the last two weeks, range of offers and trades has been W240 from 3.85 to 4.00, W320 from 3.35 to 3.50, W450 & SW320 from 3.05 to 3.15, SW360 from 2.90 to 3.00, Butts from 2.30 to 2.40, Splits from 2.25 to 2.35, Pieces from 1.55 to 1.65 FOB.
RCN prices have come down in the last one month – some portion of the decline is due to slow buying by shellers but most of the decline is due to lower yields in the cutting tests at origin. Due to early rains in many areas, drying has been a problem. Shellers expect much reduced yields of white wholes from the current crop. Coupled with wider differentials for the lower grades, this means shellers buying ideas are lower than usual. Recent offers and trades have been Benin around 1025 / Ghana around 975 / IVC around 900 C&F.
Since the beginning of the year, the market has not crossed either end of the 3.30-3.50 range which we have been seeing for several months now. Even when the market has been very quiet, none of the shellers (not even the small ones) have reduced the price below 3.30 and even when there has been reasonable activity, buyers have been reluctant to pay much more than 3.50 (even to the top large shellers).
There are mixed reports about the demand trends. Some people say that stability of price for almost a year in a relatively lower price range will induce interest in the product from roasters / packers / retailers. Others are not so sure because they feel prices will have to be stable for one season more to regain confidence in USA & EU. Another reason for concern about demand trends is the fragile financial situation in most regions. Asian demand in 2013 will certainly be better than 2012 when almonds were cheaper than cashews.
It seems that trend of regular buying in small tranches for shorter periods will continue… and this will mean that prices will continue to move sideways in the current range. The floor or the ceiling will not be challenged unless there is some unexpected development on either supply or demand side.
Supply side seems to be comfortable in RCN terms, apart from the disaster in Brazil. African RCN prices have eased and could probably come down a bit more. But as we said earlier, this will be more on account of lower quality and reduced yields (grade wise and overall). Availability of white wholes could be lower than normal. There could also be some periods of reduced processing due to slow procurement or movement of RCN from Africa.
Unless there is a very big decline in RCN prices in real terms (not for quakity reasons), downside on kernel prices is limited. If the prices and offtake for lower grades move up, it might provide some relief to shellers. Otherwise, shellers margins and cashflow will continue to be under pressure.
Overall, there is nothing on the horizon to change medium term view on the market – steady with some possibility of a limited dip in Apr/May if RCN prices come down further and a reasonable possibility of higher levels in the second half of the year, especially if demand in USA & EU picks up as expected.
Would appreciate your feedback, views on market trend in coming weeks / months, any interesting news or information…. and your interest.
Pankaj N. Sampat
Mumbai – India
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