Cashew market rules steady with signs of buoyancy

KOCHI, JUNE 25:

The cashew market ruled nearly steady at lower levels last week. Though the market was quiet the previous two weeks, a reasonable volume was traded then.

Business was reported in a wide price range - W240 from $3.75 to $3.90; W320 from $3.40 to $3.50; W450 from $3.25 to $3.35; splits & butts from $2.40 to $2.55; pieces from $1.90 to $2.05 all per lb (f.o.b.).

In the domestic market, there is some activity in broken grades but prices have not moved up, market sources said.

There is reasonable buying interest for kernels at the lower end of the current range for third quarter shipments and some buyers are willing to buy even for fourth quarter, Mr Pankaj N. Sampat, a Mumbai based dealer told Business Line.

But, he said, processors, who are sitting on high priced raw cashew nut (RCN), are not prepared to sell much at the current lower levels, especially since there is not much RCN available to buy as replacement against sales.

“If buying bids move little higher, we will probably see some more selling interest but for the time being, buyers do not seem to be ready to pay higher prices to cover volume for later shipments as they are not sure about demand trend – uncertainty and haziness continues”, he said.

RCN MARKET QUIET

RCN market is quiet. There is not much unsold quantity with origins but there will be fair amount of trading in the coming weeks between processors and from traders to processors as product starts to move. Logistic problems continue which means that the arrivals into India and Vietnam will be spread over a longer period. As discussed earlier, delayed shipments means deterioration in kernel yields.

Current prices are approx $1,350 a tonne for Guinea Bissau, approx $1,325 a tonne for Senegal/ Gambia, around $1,075 a tonne for Benin and around $975 for Ivory Coast (IVC) but very little business was being done, he said.

It would be interesting to know how much of the demand decline is due to higher prices and how much is due to reduced availability of product on the shelves.

Due to tightness in financial markets, buying has been for shorter spreads and lower volumes, reducing inventories at all links in the consuming centres.

Lower processing since April has aggravated reduction in availability. Probably, off take might have been better if more product was available to the consumer.

Neither sellers nor buyers are prepared to take any large positions. Every few weeks, there is a burst of activity when prices move up, followed by few weeks of quietness when prices drift lower.

But lack of any significant forward cover means (1) long term planning is difficult for both sides (2) any unexpected development or news results in large dips or spikes in prices.

Indian domestic traders normally start building inventory in July/Aug for the peak consumption period Aug-Dec/Jan. Expectation of better kernel availability from August should help to restrict the price increase. However, “if the US/Europe demand kicks in at the same time, we could see the market reaching the recent highs. But a “runaway” price increase is unlikely considering the continuing concern about adverse impact of high prices on off take”.

Similarly, it is difficult to expect a large decline in prices given the high prices paid for the RCN and limited replacement available till the last quarter.

Overall, there is nothing on the horizon to change the view that market will settle in the $3.50 to $3.75 range for the foreseeable future unless something dramatic happens to break either side of the range.

Source: http://www.thehindubusinessline.com/industry-and-economy/agri-biz/article3573183.ece