There is sluggish demand for cashews in 2023 on the global platform due to higher supply. India’s cashew exports have dropped by around 21 percent in the financial year-ended March 2023 on dip in overseas demand. Shipments declined to 59,581 tonnes during FY22-23 over the previous year’s 75,450 tonnes.
The outlook of the cashew industry seems poor for some time now. Demand is reducing, price is coming down a bit and there is no hope that this year will be blooming.
In the words of Mr. J. Rajmohan Pillai, reduced spending on discretionary items such as cashew nuts has hit demand globally, making it difficult for prices to go up. Mr. Pilli is chairman of Beta Group with the brand name NutKing.
Furthermore, the food crisis and energy sector are affecting the inflation globally which affects the basic spending capacity of consumers. The present condition is expected to continue this year as well.
One-tenth reduction in export orders
Generally speaking, every year importers plan their purchases and place the orders by the end of the first quarter of the year, but this time importers from US & Europe are not planning to place orders until the end of the second quarter. Till now there is one-tenth reduction of new export orders than the normal conditions.
Increment in production
All over the globe, there is an increase in the production of cashews. Looking at the numbers, production of raw cashew has gone up from 2.93 million tonnes in 2014 to 3.71 million tonnes in 2022 and is expected to reach 4.41 million tonnes. The dark side of this industry is that the demand cannot cope up with supply.
It used to be the season when sales skyrocket due to the demand for yearly contracts. But both consumption and supply have taken a hit due to economic reasons. With lower demand and export prices, informed Mr. Pillai to Business Line.
Prices are still high for export
Though demand is less and supply is more, prices of cashews are not coming down. Cashews businesses are not showing any rush to import raw cashew and their prices remain high. Besides, the expected recession in the US by the end of the year has hit demand, he said.
Last year, exports of W320 grade cashew nuts fetched $2,95-3,1 per tonne and this has come down to $2,5-2,6. Raw cashew nut prices are ruling at $1,200 per tonne. Likewise, the high floor price fixed by most governments is not viable for the industry. The rise in
temperature and erratic rainfall is also affecting the fruit setting process, leading to huge losses, he said.
Inhouse consumption gives back support to cashews
Pankaj N.Sampat of Samsun Traders pointed out that the cashew market has been steady at low levels for a long time. The 2023 crop seems to be good in most origins but kernel yields are reported to be lower in many origins.
RCN prices also come down from the high opening levels and are at reasonable levels now. It is expected that the prices will continue to move in the current range with some expectation of a small and gradual increase in the second half of 2023 provided the demand picks up. The consumption in some major importing regions (US and EU) was subdued in the second half of 2022. At the same time, the consumption in India was strong and it is expected the trend will continue in 2023, given the very reasonable prices coupled with consumer preference for healthy snacking.
Considering that prices are at a 10-12 year low, prospects are that consumption in other markets will also pick up, he said.
The overall sentiment of the global market is slightly bearish for cashew consumption but domestic support can be seen.