India: A weak Rupee weighs on cashew imports

KOCHI: Cashew exporters' hope of making huge export gains with the depreciation of the rupee has come unstuck.

Exporters import raw nuts for processing this time of the year and a weak rupee has made imports expensive while the export market is yet to pick up momentum. Exporters who process the raw nuts are scrambling for more imports as the domestic production has fallen short of expectations.

Of the nearly 14 lakh tonne of raw nuts available for processing, over half the quantity is imported, mostly from African countries.

"The domestic production is expected to be down by 25-30% and imports could therefore go up to 7.5-8 lakh tonne," said K Prakash Rao, managing partner of Kalbari Cashews. The rupee depreciation and increased demand have made raw nuts costlier. Import prices have moved up from $950 per tonne to $1,200 per tonne.

The arrival of Brazil into the import market has made the matters worse. "Brazil has imported 25,000 tonne from Tanzania to make up for a bad crop in the country," Rao said.

In the export market, the slow recovery in the US and the turmoil in Europe have hit the demand. Unfazed by the slowdown in these markets, exporters are diversifying into newer territories. "Cashew nut prices crashed from a high of $4 a pound for the 320 grade variety to $3.30 a pound. Prices have moved up slightly to $3.80 with demand showing some upward movement," said Anu S Pillai, partner of Anu Cashews.

Exporters say production shortfall in several countries is driving up prices. "We have diversified into countries like Turkey and the Middle East bloc in a big way to overcome the losses in traditional markets," Anu S Pillai pointed out.

In 2010-11, over 1.08 lakh tonne worth around Rs 2,600 crore was exported. But exports in 2011-12 could be higher because of a better unit value but official figures are yet to come out.

An increase in domestic consumption has provided relief to exporters frustrated by a sluggish overseas market. The local consumption is reported to be rising by 5% annually while a poor crop has pushed up prices.

The average price of 320-grade nuts went down to Rs 380 per kg post-Diwali but has now improved to Rs 485 and is expected to cross Rs 500 soon. The share of exporters' sales in the domestic market has climbed up from 30% to 50% now.

Source: http://economictimes.indiatimes.com/news/economy/foreign-trade/a-weak-rupee-weighs-on-cashew-imports/articleshow/13374012.cms