Cashew steady on limited activities

KOCHI, DEC 12:

The cashew market was steady last week with some sales for W320 for shipments up to April in the price range of $3.70 to $3.80 a lb (f.o.b.). Some processors were reportedly able to sell few cents higher.

There was not much business in other grades for which price levels were: W240 from $4.00 to $4.20, W450 and SW320 from $3.65 to $3.75, SW360 from $3.50 to $3.60, SSW from $3.10 to $3.20, splits and butts were from $3.00 to $3.15 and pieces from $2.80 to $3.00 a lb (f.o.b.).

QUIET DOMESTIC MARKET

Indian domestic market was very quiet. China continued to be a steady buyer in Vietnam few cents above the international market price but for selected processors and grades, trade sources said.

The raw cashew nut (RCN) market was quieter than the kernel market, which is not surprising as shellers are reluctant to buy unless they see some activity or trend in the kernel market.

“One concern, which has been expressed earlier, is that we might find ourselves in a situation that although RCN will be available, kernel availability in the first quarter might be lower because Indian and Vietnam shellers have not bought RCN”, Mr Pankaj N. Sampat, a Mumbai-based dealer told Business Line.

For the last several months, he said, everyone has been in “wait-and-watch” mode. Business is being done every month for 2-3 months ahead. Nobody is taking long positions. It seems that this will continue through December and may be early January.

“If the shellers come under pressure to sell before the buyers need to buy, we will see prices drifting lower in the first quarter. On the other hand, if buyers find in Jan that last quarter off take was not as bad as feared and they come into buy for first half of 2012, prices could stabilise in the current range, and may be even move up a bit for nearbys as processing in Jan-Mar in India and Vietnam is likely to be lower”. What happens in the financial markets in the next 6-8 weeks will also have an impact on consumer sentiment and buying / selling strategies and risk appetite of everyone in the chain, he said.

DEMAND TREND

Until there is some indication of demand trend and 2012 supply prospects, which will be known only by second quarter of 2012, the trend of short term buying and selling will mean that there will be periodic spikes and dips in activity and prices. Whether the range in early 2012 will remain the same or drift lower will depend on how things develop on demand side in the first few weeks of 2012 “the joker in the pack will be the developments in the financial markets!”, he pointed out.

For the time being, market is quiet with a steady to soft tone but this could change quickly if demand decline is not as much as feared or if there is problem with any of the 2012 crops.

Other factors to be kept in mind, he said, are: (1) current range is about 20 per cent lower than peak of mid 2011 and close to average of 2011; (2) processing costs are $1.25-1.50 a lb; and (3) raw material costs are unlikely to go below 2.25 per lb even if the crops are normal. These factors will limit the downside potential. Selling below cost can and does happen but it can only be for short periods.

Unless something dramatic happens, “the outlook is that market will move around the current range for next 2-3 months… and a realistic informed discussion on trend for second half 2012 will be possible in the second quarter of 2012”, Mr Pankaj said.

Source: http://www.thehindubusinessline.com/markets/commodities/article2708981.ece