Cashew market subdued on volatile global economy

KOCHI, DEC. 19:

Cashew market was very quiet last week with a steady to soft tone. There was very little buying interest. However, some selling interest from few processors was seen, but most of the large processors were withdrawn, trading sources in Mumbai said.

Price levels were more or less unchanged at around $4 for W240; $3.75 for W320; at around $3.60 for W450; at around $3 for Splits & Butts and for Pieces at around $2.85/lb (f.o.b).

China continued to buy selectively in Vietnam. Indian market continued to be very quiet.

Raw Cashew Nut (RCN) market is at a standstill. There is no activity in Tanzania as the Board is not willing to accept lower bids in the auctions.

Traders, who have stocks, have reduced their offers but there is not much buying interest because of dull kernel market and depreciation of Indian rupee against the dollar, Mr Pankaj N. Sampat, a Mumbai-based dealer told Business Line.

ECONOMIC UNCERTAINTY

The volatile economic situation in Europe and to some extent in the US, is making things difficult for all businesses to take any long term positions as it is impossible to forecast how things will develop in the coming weeks and months, he said. And what happens there will effect other countries too. “There is unprecedented uncertainty on all factors which affect decision making and operational strategy i.e., consumer sentiment (demand forecast), finance availability (carrying capacity) plus risk appetite.

Unless there is some stability and clarity on this, commodity markets will continue to be volatile, reacting to events rather than long term planning”, he said.

One concern which was voiced earlier also, is that the cashew trade might find itself in a situation where RCN are available but kernel supply could be tight.

Normally by the end of Dec, 90 per cent of the Tanzania crop is shipped out and instead, this year, it will probably be less than a third. This could mean that processing in India and Vietnam in first quarter will be much lower than normal. Apart from that, delay in shipments will mean deterioration in quality and kernel yield.

It seems that the stand-off in the market will continue for some time. Until there is some indication of demand trend, buyers will be reluctant to buy at current levels. Unless they have some idea of 2012 crops, shellers will be reluctant to discount too much to get sales on the books.

“We can, anyway, expect two tipping points in the near future say in January, when some indication of demand trend should be available, and March, when a realistic estimate of crops can be made”, the trade added.

Source: http://www.thehindubusinessline.com/industry-and-economy/agri-biz/article2729205.ece