Cashew Prices Are Expected to Stay Stable

Current Scenario

For the W320 variety, the pre-closing price was $9,83 per kg, a slump of $0,13 per kg. The primary reason for the inactive market is the season being a time of non-consumption, and it will continue to weigh the market for sentiments in the coming days.

Reports suggest there won’t be much changed in the price for the next week, while the rates are likely to increase with the arrival of the festive and the wedding season, which is still a couple of months away.

World Scenario

The market has started to re-activate from the end of April. It is due to the buyers returning to inquire about the prices. Moreover, reports also state that few purchases were made at a good price. This led the Vietnam cashew prices to shoot up instantly.

Similarly, the African kernels have been trading at a good price, like the Vietnam products. This is mainly because discerning buyers are willing to pay higher rates for better quality products with traceability and sustainability.

The Indian processors are now selling the premium quality to Vietnam and Africa at a reasonable price, though the global kernel share of India is down to 10 percent. As a result, the price of Indian kernels has not picked up much this season.

In the international market, the price of broken kernels has been increasing since 2021. It is because of the tremendous demand amidst the lower yield. Therefore, it is expected that there will be a narrowing of price between the whole and the broken grades.

Earlier in the year, the cashew market faced some challenges due to COVID-19, logistics, freight, and flat market volatility, and they continue to persist.

It was expected there would be a reasonable supply of the commodity, but there has been a significant decrease in the Vietnam and Cambodian crop. Also, there is concern about West African and Indian crop production, which can be a concerning factor in the coming days.

Although it is too early in the year to talk about demand growth, Vietnam’s exports in Q1-2022 are lower than in Q1-2021 (for the first time in several years) and are something to be watched closely. This could be because buyers had bought in excess in Q3/Q4-2021; Processing in Q1-2022 was low because of an extended period of low kernel prices; Shipping uncertainties in 2022 and its impact on kernel availability in importing countries.

The increasing number of cases of COVID-19 in China has led to lower purchases of cashew from the producing countries, which is impacting the price and will continue to unless the situation changes.

Logistic challenges continue – especially the longer transit time due to blockages in China and congestions at many transit ports leading to roll-overs and cancellations.

Freight rates and their volatility have come down from 2021 peaks– at least for the time being – but the rates are still much above the long-term average.

With Oil prices above 100 USD, there is not much chance of any significant relief in freight rates in the medium term.

Prediction

Due to general economic weakness in most countries, there is some uncertainty on demand.

On the supply side, it certainly looks that kernel availability in 2022 will be lower than in 2021, with reduced crops in some origins and lower kernel yields in most. Experts state that during 2022, processors will be using higher-priced RCN. Due to inflation, processing and logistic costs will be higher (and so will carrying costs with interest rates moving higher).

Considering all factors, unless there is a dramatic fall in demand, the downside is limited to unexpected supply increases. Furthermore, there is a possibility of a moderate rise in prices in the coming weeks.

Despite the sluggish buying among the stockists at the reduced price, the market is expected to stay stable in the coming days for cashew. Therefore, as per experts, there won’t be any boom in the price of cashew in the next few days.

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