Cashew report - week 43 01-11-2012

After two weeks of decent activity, cashew market was a bit quieter in Week 43 but with a steady to firm undertone. There continues to be good interest for W240 & W320 at the last traded levels but most processors are asking few cents more. There was some activity in other grades which is a welcome change from the last several weeks when most grades were neglected. Activity picked up in Indian domestic market with a reasonable (not large) uptick in price for good quality product

Range of offers (and bids) moved up a notch in most grades - range this week was W240 from 3.65 to 3.75 / W320 from 3.25 to 3.35 / W450 from 2.95 to 3.05 / SW320 from 3.00 to 3.10 / SW360 from 2.80 to 2.90 / SSW from 2.40 to 2.55 / Splits from 2.00 to 2.15 / Butts from 2.15 to 2.25 / Pieces from 1.55 to 1.70 FOB.

There are reports of some activity in GB RCN to Brazil and India... and some slight pick up in interest for spot goods in India & Vietnam.  It seems that new crop buying by co-ops in Tanzania is slow.  There were some reports that co-ops may be allowed to sell without auctions but nothing has been announced.  There is no news about movement of last year's unsold stocks either. During October,  we have seen reasonable kernel activity with the 2 main markets but the other markets have continued to be quiet.   Most of the activity this month with EU & USA has been for shipments upto Mar/Apr (and limited volumes for second quarter).  And major portion of the buying has been for White Wholes. As we have discussed before, pattern of short term buying at regular intervals is a double edged sword.  The good thing is that it keeps the market stable since there is always some segment of the market buying and some suppliers ready to sell.  On the flip side,  this pattern causes sharp dips & spikes when there is some exceptional activity or sudden development on either supply or demand side. 

Considering that overall supply - so far in the form of RCN - is comfortable, good kernel business now would mean that 2012 crop RCN would be taken care of by end of the year - even if the kernel sales are shipment upto  June 2013. With that, kernel buyers could afford to be quiet till some idea of 2013 crop is available.  This would enable steady and smooth market development in 2013., rather than the big moves we have seen in the last couple of years.  BUT that is what would happen in an IDEAL world !!!
There are reports that despite significantly lower prices, contracting by retailers in EU (second largest importer) for 2013 has been for lower volumes and shorter spreads than normal.  If this means less product on the shelf, it may mean a slow beginning in 2013.  But if the lower retail prices - coupled with any improvement in consumer sentiment - leads to quicker emptying of shelves, there could be a spurt in buying in Mar/Apr which might not be good for the 2013 trend.   Also we have to see what happens with retail prices and offtake in the biggest importer - USA - in the coming months.

Overall, the next 2-3 months should be interesting... and developments during this period will indicate whether the cashew industry will have a smooth or bumpy 2013.


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