Cashew rules steady in listless market

Kochi, Dec 6

Cashew market during the week ruled steady without effecting any change in the prices in export sales and in the domestic market.

Sales were concluded for W240 between $4.10 and $4.15, W320 between $3.70 and $3.75, W450 & SW at around $3.60 (f.o.b). Some sales were made to the US, West Asia and off-markets. Europe was relatively quiet.

Indian domestic market was quiet but prices are steady, trade sources said. During October and November, reasonable volume was traded for shipment in first quarter of 2011.

If off take is low as many people in Europe and the US expect they may be able to restrain buying in the first quarter as purchases already made will take them into the second quarter with reasonable inventory. “This may soften prices before the 2011 crops start. But if off take is not as bad as feared, they will have to start buying in Feb to cover second quarter needs”, Mr Pankaj N Sampat, a Mumbai-based dealer told Business Line.

Traditionally, first quarter production is lower and will be still lower in 2011 because of short 2010 crops. So, any significant buying in first quarter will result in a firm market as unsold quantities are low. In the last few weeks, difference between large wholes and W320 has widened and this trend is likely to continue if the Brazil crop is as bad as feared, he said. This could also lead to narrowing of differential between W320 and brokens. But, there has not been much change so far, except that prices for broken grades in India have gone up very high, he said.

Raw Cashew Nut (RCN) market also is steady. More than 60 per cent of the Tanzanian crop has been auctioned and now quantities in the weekly auction are becoming smaller.

By the end of December or early January, almost everything would have been sold, he said. Shipments from Mozambique are expected to start in Jan provided there are no changes in policy. Crop there seems to be good but traders are quoting high prices. Brazil arrivals continue to be slow, he said.

“Since prices for all nuts – except maybe Almonds – are high, supply side factors, including raw material and processing costs, will have more impact on cashew kernel prices. Processing costs in India, and in Brazil as well, are going up next year,” he said.

On top of this, if RCN prices remain high, there is very little chance of a big decline in kernel prices although there may be periodic dips from time to time. “The only possibility for a substantial decline in cashew prices in 2011 is, if off take is severely affected, as many people fear, and all 2011 crops are good. There will be no clarity on these two aspects till middle of second quarter”, Mr Pankaj said. “We expect reasonable activity during Dec as some buyers will probably want to cover additional volume for first half of 2011 to avoid being caught with low cover. This will keep the market moving in the current range. First quarter of 2011 is going to be very crucial – kernel activity and news of crop prospects in that period will determine buying strategy of the processors and RCN traders and that will guide the kernel prices for 2011”, he said.

(Source: http://www.blonnet.com/2010/12/07/stories/2010120753901800.htm)