Cashew nuts turn dearer as West Africa political crisis hits supply

Kochi: MUNCHING cashew nuts may not come easy on your pockets with supply concerns turning it very costly. Two bad crop years and lower shipments from Western Africa due to political problems have turned the nuts dearer. Processors and traders are wary of contracting huge volumes and prefer to buy when needed.

Demand from Asian markets continues to drive the market higher.

“In the next 3-4 months, we expect good demand in Asia for the traditional festivals. Also the two big importing regions, US and EU are expected to continue their pattern of buying,” Pankaj N Sampat of Mumbai based Samsons Trading said.

“Traders normally start buying from mid to late June to build up positions before the peak consumption period of August -December. It will be interesting to see how they operate this year as high prices could reduce carrying capacity, but if the demand is there, financing should not be a problem,” he added. Pankaj said that the Indian domestic market which was quiet for about six weeks is showing some signs of activity.

According to the International Nut & Dried Fruit Council (INC), the Global Cashew Trade is estimated at around 5, 13,750 tonne on Kernel basis in 2010. Due to weather problems in most growing areas raw seed production was down by 15-20% in 2010. Prices of raw cashew are very high.

Although there were fears that consumption of cashew and other nuts would be hit by the global recession, this did not materialize. There was reasonable growth in Europe and US, which grew by 5-8%. India, China and the Middle Eastern Markets have registered double digit growth. Asia, China and Middle Eastern Markets are the new growth engines of nut Consumption.

“Shipments from West Africa are picking up but not to the extent expected. It seems that the shipping period will extend several weeks beyond normal. This will definitely affect the kernel yields and will also mean continued tightness of kernel availability for next few months,” Pankaj said. “A change in the cashew market trend will happen only when the supply-demand balance turns easier. This is possible only when supply increases significantly or if there is a significant move away from cashews in major consuming regions. Until there are clear indications of change in either of the fundamental factors, we should expect a steady to firm market,” he added.

The main competition to nuts in the supermarket shelves comes from cheaper food items such as extruded snacks, potato chips etc. But now with the health benefit of consumption of nuts being recognized by the consumers, INC forecasts bright prospects for the growth in consumption of nuts, including cashews in the next few years, worldwide.

The rapid economic growth and rise in disposable income in Asian countries has contributed to the growth in consumption of nuts.

(Source: http://www.financialexpress.com/news/cashew-nuts-turn-dearer-as-west-africa-political-crisis-hits-supply/793668/0)