Decline in global cashew prices affects processors
July 27, 2018 | 0 Comments
After remaining steady for about two years, global cashew prices have begun moving south, registering a 20 per cent drop in the last three months. The price decline was in the range of $3.75-4.25 per pound, from $4.75-5 in the second half of March. A significant feature of the decline in prices is that it occurred during the main harvest; previously the fall happened after the harvest, said Pankaj N Sampat of the Mumbai-based Samsun Traders. Banks in Vietnam and India have reduced financing for processors because of the risk at high levels. Also, in India, there has been a strict enforcement of outward remittance rules.
All this has put a stop to competitive bidding of the raw cashewnut (RCN). The rates had come down to $1,800-2,000 per tonne by May, and declined further to $1,600-1,800 by end-June. It is the processors who have been hardest hit following the drop in prices. This is especially true in the case of those who bought RCN in end-2017 or early-2018, and of RCN traders forced to give discounts in February-April, in addition to holding stocks bought at high prices. However, growers have largely emerged unscathed, as they were able to command nearly the same price as last year.
Vietnam W320 grade, the most popular grade in the international market, is trading in the range of $3.75-4 per pound. The Indian price is about five per cent higher. RCN is trading in the range of $1550-1,800 per tonne. Traders point out that lower imports of RCN in April-June would have some impact on kernel shipments in August. The reduced yields, coupled with further reduction due to late processing, may lead to lower kernel availability in the second half of 2018. In the declining market, Indian traders have also been buying limited volumes. There has been no build-up of inventory in consuming areas. However, domestic traders foresee demand as the market with the impending festival season.
They are of the view that the downside is limited since prices have already come down over 25 per cent from the peak, for both RCN and kernels. “We expect that in the rest of the year, W320 will be in the $3.75-4.25 range with more business in the middle- and higher-end,” Sampat said.