Samsons Traders

22 OCT 2017

From a range of 5.00-5.25 in second quarter 2017, price for W320 came down to 4.75-5.00 FOB by end Sep / early Oct 2017.

In Week 42, range of offers (with limited activity) has been W240 from 4.90 to 5.15, W320 from 4.75 to 5.00,  W450 from 4.70 to 4.90, SW from 4.50 to 4.70, Splits from 4.40 to 4.60, Pieces from 3.65 to 3.80 FOB

Lower end of the range is for nearbys from small & medium processors who keep selling at whatever price they can because they need to have quick turnover + they cannot make forward sales.

In first half of 2017, prices reached historical peaks – about US$ 2450 for RCN and about US$ 5.25 for W320

GB / Senegal / Gambia RCN which had traded as high as US$ 2400-2450 C&F have come down to approx US$ 2200-2250

Indonesia RCN which was trading around US$ 2450 end Aug / early Sep is down to US$ 2350 per mt.

Tanzania RCN crop is reported to be good. Some pre-auction business has been down from US$ 2450 down to US$ 2350.  First auction in Week 42 saw subdued interest. We have to see strength of processor demand and trader risk appetite in next 2-3 weeks to get indication of movement during the season.

Here are India & Vietnam statistics for last 3 years (Jan to Aug) :

                                         2015                2016              2017

Vietnam Import            710,300           772,500        1,059,400

Vietnam Export             211,100          229,900          230,100

India Import                  772,200          538,500           507,700

India Export                     71,000             51,500            58,700

This shows (1) India share of imports continues to decline – big drop in 2 years (2) India exports in 2017 are better than 2016 but still significantly lower than 2015 (3) Vietnam is increasing both imports & exports (4) there was either a big drop in Vietnam crop or there is a big inventory in Vietnam  (or there is an error in the statistics !!!)

Going forward, market trend for first half 2018 is very unclear.

Prices of Almonds, Walnuts, Pecans have increased from the low levels seen in 2016 / early 2017.  Prices of some other nuts like Macadamia & Brazil Nuts are steady at the higher levels. Cashews are below the peak of mid 2017 and close to the average of 2016.

The increase in Cashew prices over the last 18 months (from Mar/Apr 2016) has been passed on to retail prices – partly in some markets and fully in some others (mainly Asia which is the biggest consumer).  So far, there has not been any indication of big decline in off-take.  It is not certain whether this trend will continue or change.

We do not see scope for any big decline from the current price range UNLESS there is a big fall in activity in kernels in last quarter 2017 as well as first quarter of 2018.

If that happens, processors will be slow in RCN buying leading to lower RCN prices. And if the 2018 Northern crops are normal, we could see a big drop in prices in second quarter 2018.

If there is moderate kernel activity in the next 2 quarters, we will probably see market move sideways in current range. Processors will need to keep buying RCN and this will keep prices steady.  There could be a possibility of a dip to 4.50-4.75 range in second quarter of 2018 if Northern crops are good.

Any spurt in kernel buying in next 3-4 months would lead to a sudden jump in prices because processors would have to rush in to buy RCN. Prices could move up again to 5.00-5.25 range and stay there till 2018 crops are in full swing.

It is quite possible that some traders will sell at lower levels expecting reduction in demand leading to lower prices in 2018 but processors would be reluctant to take positions at lower levels at this stage.  They will wait to get an idea of RCN price trend before making any large kernel sales for 2018 shipments.

Overall, situation is very uncertain and it is much tougher than normal to judge what the trend will be.

Regards,