Cashew market steady as demand matches supply

KOCHI, NOV. 7:

The cashew held steady in the past two weeks with demand matching supply for certain grades.

Some small and medium processors sold W320 at $3.65-3.80 per lb (f.o.b). “There was a fair amount of buying interest in this range but selling interest was from a few small and medium processors only,” trade sources said.

Most large processors were quoting above $4.00 per lb (f.o.b) and some even sold few containers at around $3.95 per lb (f.o.b), Mr Pankaj N. Sampat, a Mumbai based dealer, told Business Line. There was hardly any business in other grades but nominal values were at $4.15-4.35 for W240, W450, $3.70-3.85 for SW320, $3.50-3.65 for SW360. The Splits and Butts sold at $3.15-3.30 while Pieces at $3.00-3.15 per lb (f.o.b).

QUIET DOMESTIC MARKET

The Indian domestic market was quiet with lower-than-expected retail off-take before Diwali. Prices dropped a bit in late October but are now stable with some buying interest at the lower levels ahead of the marriage season.

Vietnam's local market – China – is showing some signs of activity but buyers are selective due to quality issues in the last few months, he said.

Raw Cashew Nut market is reflecting the quietness in the kernel market. There was hardly any buying interest from processors for West African RCN stocks in India/ Vietnam and for new crops from Indonesia and East Africa, he said.

Prices are at around $1,550 a tonne for Tanzania/Indonesia, at around $1,500 for Guinea Bissau and at around $1,200 a tonne for other West African produce. Brazil crop is developing well, with estimates ranging from 260,000 to 300,000 tonnes.

“With wider area and longer arrival period, realistic estimate will be possible in January, however, it is certain that crop is much better than the disaster of 2010,” trade sources predicted.

During the price rise period last year, the US and the EU buyers refrained from forward buying and instead were buying for few months' requirement at a time. “At no stage, has any big volume been purchased for delivery beyond 3-4 months. Recent price decline from $4.70-4.75 to $3.70-4.00 during August/September has meant that buyers have further withdrawn.

Although some buyers feel that current levels might be sustainable in the medium term, they are probably waiting to see whether there is any further drift before they step in to buy”, Mr Pankaj said.

Due to high prices and uncertain economic situation, there is concern over demand,making buyers wary of taking large positions. Even if off-take is lower by double digits, buyers will have to start buying soon for shipment for January forwards, as very little volume has been purchased so far, he said.

Good crop in Brazil will ease the supply tightness to some extent but a real change in the supply situation from tight to comfortable will happen only if the 2012 Northern crops are good. Until that happens (April/May 2012) and RCN prices come down significantly, processors will not be in a hurry to sell at lower prices.

On the buying side, buyers will not be keen to buy large volumes for longer period unless kernel prices come down a bit more or there is some indication about demand trend. So, the trend of buying for short periods can be expected to continue for the next 4-5 months and this should provide support to the market in the current range.

“We feel that market will move sideways in a narrow range for the next few months. There might be a small spike before end of the year if there is reasonable buying for first quarter 2012 shipments. Until the 2012 crops start, downside will be limited to few cents below the current range unless something dramatic happens on the economic situation or the RCN prices drop significantly before end of the year. It is futile to try and guess the trend beyond that as there are too many factors – fundamental and external – that will affect the market movement,”a trader said.

Source: http://www.thehindubusinessline.com/markets/commodities/article2606620.ece