Cashew Market Report – Nov 3, 2013

During October 2013, the cashew market has been very steady with W320 trading in the 3.15-3.30 FOB range. By middle of Oct, most of the lower offers for W240 and W320 were taken out. During Sep & Oct, good volume was traded at the lower and middle of the range for shipments upto Dec. Some business was done at higher end of the range for shipments upto Mar/Apr 2014 (and scattered business for later positions as well).

In week 44, range of cashew prices was W240 from 3.70 to 3.85, W320 from 3.20 to 3.30, W450 and SW320 from 2.95 to 3.05, Splits from 2.20 to 2.30 and Pieces from 1.45 to 1.55 FOB.

As expected, Indian domestic market has been quiet in the last two weeks. Sales for festival season have been reasonable, not spectacular. We should see some activity by middle of Nov for inventory replenishment and the beginning of the marriage season.

RCN market started moving up slowly from middle of Sep and seems to have moved to unrealistically high levels in the last 2 weeks.  About 12,000mt have been sold in the first two Tanzania auctions at prices which are about 10% higher than present kernel market. Since there is not much kernel demand at higher levels, it is difficult to understand such high RCN prices.

During the last 12 months, kernel market has been moving in 3.20 to 3.40 range (except for the recent short lived drop to 3.05-3.20 range). Whenever the market has come close to the bottom of the range, selling interest has been limited to few processors for limited quantities for nearbys. Whenever market has come to 3.40, buyers have been reluctant to take large positions.

General feeling is that current price range is comfortable especially because prices of almost all other nuts are higher than what they have been in the last 12 months. This should mean more interest and steady demand for cashews.  If the trend of regular buying for small tranches for short spreads continues, there may not be any big move in prices.  But if buyers need to buy larger volumes for longer spreads, processors will not be able to take on commitments unless they get a reasonable premium because prices are already close to low end of the range of last 4 years.

If the current trend continues and if the kernel market does not move beyond the 3.40 level, processors will find it difficult to buy Tanzania RCN at the current high levels which are about 10% higher than present kernel prices.  They will probably limit their buying to whatever they need to keep factories running till the large Northern crops start in April. But if they are able to sell kernels in the next few weeks at higher than current levels, it is quite possible that RCN buying will continue at current levels and we may start the 2014 season with high prices.

It is very difficult to get a handle on the market trend especially with the very high prices paid for RCN in the last 2 weeks despite the slow kernel market.   The next 4-6 weeks should provide some clarity about what to expect in 2014.

Pankaj N. Sampat
Mumbai – India
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