Cashew rules firm on tight supply

KOCHI, JUNE 27:

The cashew market last week ruled steady with a firm undertone, and there was a fair amount of business in W320, W450, Splits and Pieces.

Business for W240 was done at $4.80-4.85 a lb, W320 at $4.50-4.60, W450 at $4.45-4.50, Splits at $3.90-3.95, and Pieces at $3.80-3.85 (fob). While some processors were selling at a few cents lower, some others were able to sell at a few cents higher.

During the last three weeks, the domestic market has been firm with prices moving up 10-12 per cent for brokens and 5-6 per cent for wholes.

Availability for prompt deliveries is limited and this is adding to the firmness of the market. Normally, availability is better during August-December, which is the peak consumption period in India. But this year, the supply will not be as comfortable as in the past as the raw cashew nut (RCN) flow has been spread over a longer period.

Added to this, RCN imports have been lower following more aggressive buying by Vietnam and Brazil which have already taken control of a good quantity, and the pipeline is almost empty, the trade sources said.

Slow arrivals

Currently, the RCN market is steady. Guinea Bissau (GB) is at around $1,700 a tonne, Senegal/Gambia $1,600, Benin $1,550, and Ivory Coast (IVC) $1,350-1,450 (c&f).

Arrivals into India have also been slow, with transit time at around eight weeks compared with the normal 4-5 weeks. Coupled with the delays in shipments from IVC, the processing in April-June has been much lower than normal, Mr Pankaj N. Sampat, a Mumbai-based dealer told Business Line.

He said buyers seem to be reluctant to buy larger volumes for longer spreads as they are concerned about the impact of high prices on usage (so far the impact has not been much because currency movements are reducing the impact in some markets and some markets have absorbed the increase).

“At the back of their mind, there is probably also a concern about the precarious condition of the economy and financial markets.”

The pattern of buying 2-3 months' requirements at a time coupled with the tight supply position is keeping the market firm, he said. “Some market or the other is always buying, and since RCN shipments are coming in slowly, most sellers are not under pressure to sell even if markets go quiet for a couple of weeks.

“At such times, some processors who need to keep selling regularly because they do not have forward sales (by choice or compulsion) sell at few cents lower, but such lower offers are quickly absorbed.”

Short-term buying

According to the trade, this trend of short-term buying which provides support to the market will continue until:

the supply improves significantly (which is unlikely in the short term as 2011 Southern and 2012 Northern crops have to be good to provide relief on supply side);

there is a big drop in usage in the last quarter and in contracting for 2012; or

buyers cover a larger portion of their requirements for a longer time.

Overall, the market outlook continues to be hazy and until “we come to some tipping point, the market will continue to dip (buying opportunity) and spike (selling chance). Trend change will happen only when there is some big change in supply or demand (or some big external development), Mr Pankaj added.

Source: http://www.thehindubusinessline.com/industry-and-economy/agri-biz/article2139533.ece?homepage=true