01 JAN 2025
BEST WISHES TO YOU + YOURS FOR HEALTHY & PEACEFUL 2025 😊😊
This is a good time to look back on a very interesting “Cashew Year”… and peek into what we can expect in 2025.
After 2-3 years of somnolence, the Cashew market suddenly woke up in May 2024.
From mid 2022 to late 2023, W320 Cashew moved sideways in range of $ 2.50-2.75 FOB. During late 2023 and beginning of 2024, they came down a bit more with the lowest being $ 2.30-2.50 FOB in Q1-2024.
During Q1-2024, most people in the trade were expecting that Cashew prices would move up in 2024 on the back of strong demand growth in 2023.
But, everyone was surprised by what happened during 6 weeks in May/Jun – market jumped up by about 40% with W320 trading in $ 3.50-3.80 range.
Main reasons for the price increase were strong fundamentals – good demand growth in 2023 & 2024 coupled with reduced inventory at beginning of 2024 followed by lower 2024 production. BUT, the reason for the unexpected jump was sentimental knee-jerk reaction due to the disruption in supply of RCN because of unexpected actions by IVC Government adding fuel to the fire.
During July & Aug 2024, W320 drifted down to $ 3.25-3.40 and then moved up again to $ 3.40-3.60 where it stabilized in Q4-2024.
All the prices mentioned above are FOB Vietnam – Prices from Africa were 15-20 cents higher due to better & consistent quality plus the advantage of single origin traceability (Note : Africa’s share of kernel trade has increased sharply in the last 2 years) – Indian prices were 30-40 cents higher (exports continued to be low given the huge domestic demand).
During the 2024 Northern Hemisphere harvest, RCN increased from $ 1000-1100 in Feb/Mar to $ 1600-1700 by Jun/Jul. As usual, Southern Hemisphere harvest has traded at higher levels – started in Sep/Oct around $ 2100 and eased to around $ 1900 by mid Dec.
Some observations on supply & demand in 2024 :
Cambodia crop was bigger than 2023 (which was a short crop). It was over 800K and almost all of it was exported to Vietnam. Local processing is very limited – less than 5%.
Vietnam crop was approx 325-350K which is about 10-15% below normal. Vietnam imports of RCN are slightly lower than 2023 but imports of semi-processed kernels are significantly higher. Although Vietnam RCN production is only 6% of World Production, for 3 decades it has been the pre-dominant force in World Cashew Trade due to its low-cost processing expertise.
Indian crop was short in some areas. Trade estimates are that crop was in the range of 600-650K which would be about 10-15% below normal. India RCN imports were lower probably due to very large imports in 2023.
IVC crop was probably about 1 million tons compared to 1.2 million tons in 2023. Out of this about 300K was processed locally – this will probably go up to 500K in 2025.
Benin crop was also short. Difficult to estimate how short because a big portion of the crop was shipped out from Togo & Nigeria because of the ban on export of RCN. Local processors were not able to procure enough to meet their production needs.
Other West Africa countries had almost normal crops.
In the Southern Hemisphere, Tanzania had a very good crop – close to 400K. Indonesia was slightly lower. Mozambique is expected to have a good crop.
Due to the fragmented production, it is not possible to get exact figures of World Production. General feeling is that 2024 crop was about 8-10% lower than 2023. Another factor is that in many West African countries, kernel yields are lower than normal. This will reduce kernel availability by another 6-8%.
Demand growth in 2023 was very strong leading to significant drawdown of inventory built up in 2021 + 2022. In 2024 also, there was good growth in all markets (although pace was slower than 2023 in some markets).
Lower kernel availability in 2024 means that inventory at the end of 2024 will be lower than a year ago. Supply tightness will probably continue till 2025 crops start getting processed in Q2-2025.
Looking at 2025 :
Traditionally, Sep-Nov is the period when a lot of business is done for next year shipments but this has not happened this year – the volume has been much much lower than normal and most of it has been for shorter spreads. This reduced activity in Q4-2024 could mean that there will be more than normal kernel buying in Q1-2025.
Buyers are hesitant to cover at current levels which are significantly higher than previous 2-3 years (but prices are not high if we look at 5-year or 10-year range).
Processors also are not very keen to take large positions as they do not see any respite from the high RCN prices in the near future. Although RCN prices have come down in the last few weeks, they are significantly higher than FH of 2025. RCN stocks in India & Vietnam seem to be low. There is a feeling that lower year-end inventory might lead to high + firm RCN prices at the beginning of 2025 harvest.
Processing in Africa (especially Ivory Coast & Nigeria) has increased in the last 2-3 years. African processors continue to face challenges of logistics, slower cash turnover, higher processing costs, etc. But they seem to be doing a good job in terms of quality. Except for the Far East & Australia, share of African processed cashews is increasing in all markets. African kernels are becoming an important part of the sourcing strategy of many large buyers, This trend is likely to accelerate as several new plants are coming up.
So far, there are no adverse weather news / patterns and if this continues, we can expect good 2025 crop – we will know more in Q2.
An important factor to be watched closely is Government Policy. Ghana has indicated higher farm gate price (and a possible export tax on RCN). Benin may also take some action to reduce RCN movement to Nigeria & Togo. IVC is expected to announce a higher price plus there are reports that RCN exporters may not be allowed to buy for first few weeks of the season. This could reduce pre-financing and will certainly increase the risk of taking forward positions. And will put pressure on processors to pay high prices for early shipments from West Africa. Vietnam will have a slight advantage here because they have Cambodia crop to feed them for first few months of the year.
With this background, it certainly looks like market will remain steady to firm for next few months – definitely for Q1-2025 and maybe even Q2-2025.
My feeling is that we will see market moving sideways in the current 3.50-3.75 range for most of 2025 unless something dramatic happens.
Only possibility for a significant decline will be if 2025 crops are very good (which we will know only in Q2 of 2025) or if the off-take in FH of 2025 is significantly lower.
Please share your views, comments, forecast.
Thank you for your continued support.
Regards,
Pankaj N. Sampat
SAMSONS TRADERS
Mumbai & San Francisco
Phone +91 98200 79015
Email pankaj@samsons.co.in
Samsons Traders 