Cashew market has been very steady during June with prices slightly higher than the lows seen in Apr/May.  There was reasonable activity with all markets throughout the month – mainly for shipments till Aug/Sep but some for later positions as well.  Indian domestic market which was quiet for several weeks is seeing some buying by traders in the consuming areas in the last two weeks but there has been no significant change in prices.

During the current week 26, trades and offers have been in a narrower range i.e. W240 from 3.80 to 3.90, W320 from 3.25 to 3.40,  W450 from 3.00 to 3.15, SW320 from 3.00 to 3.10, SW360 from 2.85 to 2.90, Butts from 2.40 to 2.45, Splits from 2.20 to 2.30, Pieces from 1.50 to 1.55 FOB

RCN prices were declining until the middle of June but have stabilised now. Offers and trades are in the range of US$ 750 to US$ 925 C&F depending on the quality.  There has been reasonable buying interest in the last couple of weeks but availability of good quality RCN is limited.

As we enter the second half of the year, it is a good time to review what has happened in the first half and look at what we can expect to happen during the second half.

During the first half, we have seen a fairly stable kernel market moving within a plus/minus 5% range – low of 3.20 and high of 3.50 FOB for W320 with most of the business being done in the 3.25-3.40 range.  We have seen a decline in RCN prices in all origins – part of it due to yields and part of it due to sheller reluctance to buy since kernel activity has been limited to short term buying.   Another reason has been the re-writing of parity calculations due to widening of grade differentials. Apart from some problems in the first few weeks of the season, movement from West Africa has been reasonably smooth but the unseasonal rains in some areas have affected the kernel yields.

Overall,  RCN  supply in 2013 is likely to be the same as 2012 despite the big shortfall in Brazil production.  After a steady decline, RCN prices seem to have reached a tipping point – any further decline could affect collection.  Shelling capacity is not being utilised fully as shellers have not bought RCN as briskly as before – some due to financing issues and others due to slow kernel market.  So, kernel availability could be tight in some months – this could mean short term price spikes but may not make a difference in the bigger picture.

Since the supply side factors are now known and factored into the market,  it will be the demand side which will drive  the market in the coming weeks.  With fairly stable prices in a narrow range for a reasonably long period, it is safe to expect improvement in offtake in most markets. There are signs of that with interest from some buyers for slightly longer spreads.  Although there is concern that slowdown in many regions could affect spending on non-essentials, the health positive image of nuts should mitigate that to some extent.

The next two months  will give us a better picture of the Asian situation because this is the time when inventories are built up for the peak consumption period.  In the third quarter,  USA & EU will also be covering unfilled positions for 2013  (and some portion of requirements for first half of 2014).

Considering all this, we expect market to continue in the current range with a slight possibility of breaking the top end of the range if Asian & US/EU demand kick in together in the next 2-3 months.  Although some shellers – as usual – may sell at lower levels,  the downside from current levels is very limited.

Pankaj N. Sampat
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