Hormuz Closure Upends Vietnam’s Cashew Flows as African Supply Tightens

Vietnam’s cashew market is caught between a sharp demand shock from the Middle East and a tightening raw nut supply from West Africa, leaving kernel prices under opposing pressures. Direct Gulf shipping via the Strait of Hormuz remains effectively shut, curbing an 11% export share, while higher African freight and weak early harvest yields are lending support to whole-grade kernels.

Vietnamese cashew exports are being rapidly rerouted away from the closed Hormuz corridor, with Jebel Ali-bound cargo forced through Omani, Red Sea and Mediterranean gateways. These workarounds raise costs, lengthen transit times and disrupt payments, particularly for smaller Middle East buyers. At the same time, processors face rising raw cashew nut (RCN) procurement costs from Africa and below‑trend crops in Ghana and Ivory Coast, limiting downside for kernel prices. China and the United States, which together anchor a large share of Vietnam’s export demand, currently provide the main buffer against Middle East weakness.

📈 Prices & Current Levels

Vietnamese kernel prices have recently firmed, especially for whole grades, despite softer demand from the Middle East. This firmness is driven less by demand and more by cost‑push factors on the supply side.

Origin / Grade	Location & Terms	Current Price (EUR/kg)	1‑Month Trend
VN WW240	Hanoi, FOB	≈ 7.75 EUR	Stable vs. mid‑March
VN WW320	Hanoi, FOB	≈ 6.85 EUR	Stable
VN LWP	Hanoi, FOB	≈ 5.25 EUR	Stable
IN W320 (conv.)	New Delhi, FOB	≈ 6.95 EUR	Stable
NL WW320 (conv.)	Dordrecht, FCA	≈ 5.00 EUR	Slightly softer vs. mid‑March

Overall, export quotations from Vietnam and India are broadly unchanged over recent weeks, but the cost base for Vietnamese processors is rising due to freight and raw nut constraints. This is limiting any meaningful downside in EUR terms despite the demand loss in the Gulf.

🌍 Supply & Demand Balance

Middle East demand shock

The closure of the Strait of Hormuz since late February has choked off normal liner services into the Persian Gulf, particularly to Jebel Ali in the UAE, the key regional hub for Vietnam’s cashew trade. Recent shipping and political reports confirm that, despite a ceasefire framework, the strait remains effectively constrained for commercial traffic, with Iran imposing controls and fees on transiting vessels.

Vietnam exported roughly 89,000 metric tonnes of kernels to Middle East markets in 2025, about 11% of total exports just under 800,000 tonnes. The UAE alone accounted for 47,000 tonnes, followed by Saudi Arabia (12,000 tonnes), Iraq (9,000 tonnes), Israel (6,300 tonnes), Jordan (6,000 tonnes), Lebanon (3,800 tonnes), Iran (1,200 tonnes) and Qatar (233 tonnes). With direct calls to Jebel Ali suspended, deliveries to nearly all these destinations have been simultaneously disrupted.

Larger buyers are experimenting with alternative routings, but many regional traders lack the capacity or risk appetite to manage complex multimodal solutions. As a result, effective demand from the Middle East is contracting, even though underlying retail consumption of cashews may remain relatively healthy. The combination of logistical uncertainty and rising energy‑driven inflation in the region is curbing spot purchasing and delaying new tenders.

Alternative trade corridors

To keep some flows alive, exporters are diverting cargo via three main corridors:

• Omani ports (e.g., Salalah) with onward road transport into Gulf markets.
• Red Sea ports (notably Jeddah) for distribution into eastern Saudi Arabia and neighbouring Gulf states.
• Mediterranean ports (including Mersin in Turkey) with extended rail and road legs into final markets.

These options raise transit times and introduce additional handling, insurance and war‑risk surcharges, in line with broader container and tanker cost inflation linked to the Hormuz crisis. Delays at transshipment hubs are already visible, and some Vietnamese exporters report that buyers are withholding payment until cargo reaches final destination, tightening working capital and elevating credit risk.

Stable anchors: China and the United States

Outside the conflict zone, Vietnam’s two largest markets remain broadly stable. China absorbed about 156,000 tonnes of Vietnamese kernels in 2025, with the United States taking 111,000 tonnes. Together they form a substantial share of total exports and currently underpin baseline demand while Middle East flows are impaired.

Vietnam’s diversified customer base across Asia, North America and Europe provides structural resilience, but the loss of 11% of export volume is commercially meaningful. Unless reallocated to other regions, sustained Gulf disruption will compress processor margins via weaker realised FOB prices and elevated logistics and financing costs.

📊 Fundamentals: African RCN, Freight & Weather

On the supply side, two concurrent factors are providing a floor under kernel prices:

• Higher African RCN freight: War‑related disruption has spilled over into global shipping and fuel markets, lifting freight rates and bunker costs. Moving raw cashew nuts from West Africa to Vietnam has become significantly more expensive, increasing processors’ input costs.
• Weak early West African harvest: Initial yields from key origins such as Ghana and Ivory Coast have come in below expectations, tightening the RCN pipeline feeding Vietnam’s factories and curbing available kernel output.

Weather in West Africa during the early harvest window has been mixed, with episodes of irregular rainfall and localized heat stress in some cashew‑growing belts, contributing to yield variability. While no single extreme event dominates, the pattern has been sufficient to prevent a bumper crop scenario. In the next few weeks, stability in rainfall will be crucial to avoid further downward revisions to regional cashew output.

For now, processors are reluctant to discount whole grades aggressively given the higher cost base and concern that RCN availability could tighten further into the season.

📆 Market Outlook (30–90 Days)

In the near term, the cashew market will be driven primarily by the duration and severity of the Hormuz disruption and the realized size of the West African crop.

• If effective closure persists through Q2: Vietnamese exporters will likely face mounting payment delays, rising unsold inventories earmarked for the Middle East, and persistent downward pressure on export prices into that region. Kernel prices elsewhere may hold better due to limited supply growth.
• If traffic normalizes sooner: Direct Gulf services could resume relatively quickly, enabling a partial recovery of UAE and Saudi demand. However, freight surcharges and perceived political risk mean logistics costs are unlikely to return to pre‑crisis levels immediately.
• RCN‑driven support: Should Ghana and Ivory Coast yields remain below trend, tight raw nut supply will keep whole‑grade kernels supported, even if Middle East demand recovers only gradually.

Over a 6–12 month horizon, processors may seek to redirect unsold Middle East volumes to Europe and North America, particularly if price incentives emerge and buyers look to diversify origin and supplier risk. Rebuilding confidence with Gulf buyers after an extended disruption will require time, consistent performance on alternative routings, and possibly renegotiated contract terms.

📌 Trading Outlook & Strategy

• Importers in Europe/North America: Consider layering in coverage for WW240/WW320 at current EUR levels, as upside from RCN tightness and freight may outweigh downside from Middle East demand softness.
• Middle East buyers with logistics capacity: Explore Omani/Red Sea routings to secure supply while many smaller traders remain sidelined; negotiate shared logistics cost structures and flexible delivery windows.
• Vietnamese processors/exporters: Prioritize high‑credit buyers and diversify destination mix to reduce exposure to Gulf payment delays; hedge freight and FX where possible to protect thin margins.
• Retailers: Prepare for potential retail price firmness in premium nut mixes in late 2026 if RCN tightness persists, even if wholesale kernel benchmarks appear range‑bound in the short term.

📉 3‑Day Directional Price Indication

For the next three trading days, absent a sudden and credible reopening of Hormuz to normal commercial traffic, cashew kernel prices in key hubs are likely to remain broadly stable with a slight upward bias:

• Vietnam (FOB Hanoi): WW240/WW320 and main broken grades expected to trade sideways to marginally firmer in EUR, supported by elevated RCN and freight costs.
• India (FOB New Delhi): Prices likely stable, tracking Vietnam and watching West African crop signals.
• Europe (FCA NL): Inventory‑heavy positions keep nearby prices relatively steady, but replacement cost risk from origin may gradually tilt sentiment firmer.