Cashew processors take a hit as global prices zoom

With some African countries like Nigeria holding back raw nuts & demanding higher prices for them, Indian & Vietnam processors are left with no options but to increase the prices of cashew kernels, which in turn could affect consumption.

Rising price of raw cashew nuts are causing concerns for the Indian processing & export sector.

Pratap Nair of Vijayalakshmi Cashews told FE that raw materials prices are extremely high & not viable for processors."We can't buy & system cashew  at such high prices. Indian export volumes have declined in the current financial year due to the low supply of nuts from Africa," we said.

Nigeria has almost doubled its raw nut prices in the last few days. Tanzanian nuts are over & now Ivory Coast & Benin are the source for nice quality nuts, P Nandakumar, a trade consultant said.

Last year, output dropped in India & Vietnam. Due to adverse weather condition in most growing areas raw seed production was down by 15-20% in 2010. Prices of raw cashew are extremely high, Pratap said.

"Although there were fears that consumption of cashew & other nuts would be hit by the global recession, but it was not so. There was reasonable growth in Europe & US, which grew by 5-8%. India, China & the Middle Eastern markets have registered double digit growth," we said & added that Asia, China & West Asian markets are the new growth engines of nut consumption.

"Asian market is a spot market where price changes are passed on to final consumer almost immediately,"he added. "This has meant that their purchasing prices have to be dependent on the Asian spot market prices. This phenomenon has changed the structure of the cashew market & dynamics of price movements," Pankaj said.

Pankaj N Sampat of Mumbai-based Samsons Trading Co said says that there has been a sea-change in the geographical distribution of cashew consumption. "India has been the largest consumer of cashews for some years & in the last 2-3 years, consumption in other Asian countries has also been growing fast whereas consumption in traditional markets has been flat or showing miniscule growth in some segments," we said.

Supply will continue to be tight for a few months. Supply prospects & demand trends for 2011 are uncertain. "All eyes now are on the three gigantic crops coming form India, Vietnam & West Africa which will start arriving in a few weeks. So far there is no adverse news from any origin," Pankaj said. "We expect loads of volatility for coming months depending on news about crop prospects & a steady market around current levels for next few months, unless there is gigantic negative news from the demand side," we added.

(Source: http://news.in.msn.com/business/article.aspx?cp-documentid=4865416)