The cashew market witnessed an uptrend last week with prices climbing up a few more rungs. The rise was 10-15 cents a kg for different grades.
Business was done for W240 up to $4.05 a lb; W320 up to $3.60; W450 up to $3.40; SW320 up to $3.35; LP up to $2.20/lb (f.o.b.).
Buying interest last week outstripped selling interest. At the end of the week, most shellers withdrew and the few, who were offering were quoting 5-15 cents higher than the last traded levels, Mr Pankaj N. Sampat, a Mumbai-based dealer told Business Line. The Indian domestic market, he said, continued to be quiet but stocks in consuming centres are being used up. With prices increasing, stockists may soon have to start building inventories before the peak consumption season beginning July, he said. In fact, during April, kernel prices moved up by 10-12 per cent, while raw cashew nut (RCN) prices moved up by 12-15 per cent.
Most of the increase in kernel prices has been due to concerns of RCN supply and resultant covering of shorts for nearby positions by kernel buyers, he pointed out. There was no significant forward business although there have been some enquiries and limited trades for third quarter shipments. Buyers from the US and EU seem to be reluctant to book forward positions despite supply side concerns as they are not sure whether demand will pick up in the second half, after a 15-20 per cent decline in the last two quarters. The view is that if prices move up further, the interest from retailers could be lower. Cashew has seen extreme volatility in the last 15-18 months. Also, they hope that RCN arrivals will improve in May and prices will ease.
RCN prices up
RCN prices also continued to move up and in fact, the primary reason for the increase in kernel prices in the last three weeks has been raising concerns on supply side. Price movement has been from $1,225-1,250 a tonne to $1,350 a tonne for Tanzania, from $1,050 to $1,225-1,250 for Benin and from $875-900 to $1,025-1,050 for Ivory Coast(IVC). Apart from the lower crop and yields in Ivory Coast, possible delays in movement of Guinea Bissau RCN is also causing concern, he said. The next six weeks will be crucial, he said.
Although supply concerns are pushing the market up for both RCN and kernels now, things could change if arrivals pick up during May. If that happens, that would have a sobering effect on the market which would then settle around the middle of the current range. Since the market is very delicately poised, prudent course for both shellers as well as buyers would be to take some position for the next few months to avoid being caught with a thin book if market moves against them. By late May/early June, supply prospects should be clearer and there should be some indication of demand trends. Based on that, he said, people will consider longer cover.