Cashew Market Tightens as Hormuz Closure Hits Middle East Demand and Freight

Vietnamese cashew exports are facing a rare combination of softer demand and tighter supply: war‑related disruption in the Middle East is damping offtake and complicating logistics, while higher freight and weaker West African raw nut yields are underpinning kernel prices in Vietnam.

The effective closure of the Strait of Hormuz and wider regional security risks have forced a rapid re‑routing of cashew flows into Gulf markets via Oman, Red Sea and Mediterranean ports, extending transit times and raising costs. At the same time, Vietnamese processors are paying more for African raw nuts and seeing lower‑than‑expected early harvest yields in Ghana and Ivory Coast, which is tightening availability of whole grades. For buyers, this means a market where destination demand signals (especially in the Middle East) point down, but origin prices and replacement costs remain stubbornly firm.

📈 Prices & Differentials

Vietnam remains the key price reference: indicative FOB Hanoi offers on 26 March stand around EUR 7.15–7.35/kg for WW240 and EUR 6.30–6.50/kg for WW320 (converted from current USD‑denominated offers), while broken and small pieces trade substantially lower, with LWP near EUR 4.80–5.00/kg and SP around EUR 3.95–4.10/kg.

Indian FOB New Delhi quotations are broadly aligned to slightly higher on key wholes, reflecting domestic demand and elevated freight, with conventional W320 around EUR 6.45–6.65/kg and W240 near EUR 6.90–7.15/kg. In Europe, FCA Dordrecht prompt WW320 is indicated near EUR 5.40–5.60/kg for conventional and EUR 6.60–6.85/kg for organic, showing compressed import margins versus current origin replacement costs.

Notably, the price grid over March shows stability in nominal USD levels at origin, but once higher freight and risk surcharges on Middle East routes are added, landed costs into Gulf destinations have risen, even as local buyers resist higher prices amid weaker sentiment.

🌍 Supply & Demand Balance

Vietnam exported just under 800,000 metric tons of cashew kernels in 2025, underlining its central role in global trade. China was the largest buyer with 156,000 tons, followed by the United States at 111,000 tons, while the Middle East absorbed about 89,000 tons (11% of Vietnam’s exports), led by the UAE (47,000 tons) and Saudi Arabia (12,000 tons).

The Iran war and the resulting effective closure of the Strait of Hormuz have sharply disrupted this Middle East leg. Major container lines have suspended transits through Hormuz, and sector updates indicate that traffic through the strait has collapsed by around 90% since late February, with only a fraction of normal ship numbers recorded through March 2026.

To keep cargo moving, traders are diverting shipments via Omani ports such as Salalah, Red Sea ports including Jeddah, and Mediterranean hubs like Mersin, with onward road and rail transport into Gulf markets. Some Middle East demand is reportedly returning via these alternative corridors, but trade remains constrained and operationally complex, limiting the participation of smaller regional traders.

📊 Logistics, Freight & Fundamentals

The Hormuz crisis has triggered a sharp and broad‑based spike in freight and risk costs. Shipping analyses highlight emergency surcharges and record‑high tanker and container rates out of the broader Middle East region, as insurers and carriers price in heightened security risks and route diversions. For cashews, this translates into higher CIF levels for Gulf buyers and delayed arrivals due to congested alternative ports and overland bottlenecks.

On the supply side, Vietnamese kernel prices for whole grades have firmed despite softer Middle East demand. Support comes from higher freight on raw cashew nut (RCN) shipments from Africa and lower‑than‑expected early yields in West African origins such as Ghana and Ivory Coast. While detailed harvest reports are still emerging, early‑season commentary points to a less abundant crop than initially hoped, tightening the balance for high‑quality whole kernels.

At the same time, reduced Middle East offtake is exerting downward pressure on kernel prices that would otherwise be stronger. Traders also report operational frictions: cargo delays at transhipment hubs, suspended sailings to Dubai, and, in some cases, difficulties in receiving payments for shipments stuck in transit. Rising energy prices linked to the conflict and broader inflation concerns add another layer of uncertainty for end‑user demand in nuts and dried fruits.

🌦️ Weather & Crop Outlook

Weather in key West African cashew belts (Ivory Coast, Ghana and neighbouring producers) has so far not thrown a severe new shock into the 2026 crop outlook, but the combination of early yield disappointment and typical intra‑season rainfall variability keeps the risk skewed towards a tighter raw nut balance. Early‑season dryness patches and irregular showers in some zones can affect nut fill and quality, reinforcing the current premium on well‑graded RCN supplies.

In Vietnam and India, no acute weather anomalies have been reported in the last few weeks that would materially disrupt processing operations, but elevated energy and logistics costs remain a key cost‑push factor. Buyers should assume that any further weather‑related downgrade to the West African crop would quickly translate into firmer offers for whole kernels, given already limited comfort on raw material coverage.

📆 Market Sentiment & Short‑Term Outlook

Market sentiment is mixed. On one hand, reduced imports into the Middle East, payment risks and concerns over consumer demand under high inflation are weighing on forward buying appetite. On the other, firm origin prices, risk‑laden logistics and uncertain West African crop performance limit the downside and keep sellers hesitant to discount aggressively, especially on premium whole grades.

As long as Hormuz remains effectively closed and mainline carriers avoid Gulf ports, any recovery in Middle East cashew demand will be partial and channeled through costlier, slower routes. Macro‑level energy and freight developments tied to the Iran war are therefore key external drivers: a durable easing of tensions would be needed before freight, insurance and, ultimately, kernel prices could normalize.

🧭 Trading Guidance

• Importers in Europe & North America: Consider covering a portion of Q2–Q3 needs in WW320/WW240 at current flat levels, prioritizing reliable shippers in Vietnam, as upside risk from West African RCN and freight remains significant while nearby availability of top grades is tightening.
• Middle East buyers: Focus on securing logistics solutions first (via Salalah, Jeddah or Mersin) and accept a higher landed cost floor. Engage with larger traders or integrators who can consolidate volumes and manage complex overland legs rather than relying on small spot parcels.
• Roasters and packers: Where possible, switch part of formulations towards more broken grades (LWP, SP, SWP) which remain relatively cheaper versus wholes, helping protect margins if consumer price increases are hard to pass through.
• Producers & exporters: Maintain disciplined forward sales; avoid over‑committing on long‑dated contracts until greater clarity emerges on West African crop size and Middle East logistics, especially given the risk of further freight and insurance surcharges.

📍 3‑Day Regional Price Indication (Directional)

Region / Grade	Basis	Indicative Level (EUR/kg)	3‑Day Bias
Vietnam WW240	FOB Hanoi	7.15–7.35	Sideways to slightly firm
Vietnam WW320	FOB Hanoi	6.30–6.50	Sideways to slightly firm
India W320	FOB New Delhi	6.45–6.65	Sideways
EU WW320 (conv.)	FCA NL	5.40–5.60	Sideways, margin‑pressured
Middle East CIF wholes	via alt. routes	7.60–8.10	Firm, freight‑driven