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Cashew Market Update - February 10, 2021

The cashew market has been range bound over the last couple of months and everyone seems to be on the sidelines waiting for news to start trickling in from West Africa and Vietnam.

Shippers in Vietnam continue to face shortages of containers to ship their cargo from Vietnam. To add to this, buyers who bought FOB contracts are facing shipping challenges as freight rates have almost doubled. All this is leading to contract delays and postponements at origins. The Tet holidays have added further pressure in the near term on the spot availability. We are already beginning to see signs of an increase in spot purchases by kernel buyers.

On the inshell side: the Tanzanian auctions concluded at just over 200k tons which was slightly lower than initial projections. The first crop flush in West Africa is early this year and for now the crop looks good, though it’s still early to call the crop numbers. We have already seen prices cooling off over the last couple of weeks. Meanwhile, the Ivorian government announced a minimum farmer price of XOF 305/kg last week. There are also expectations of a better crop in Vietnam and Cambodia but there is a delay of 2-3 weeks compared to last year.

On the COVID-19 situation in the US, we see some states easing restrictions, allowing restaurants to open. On the other hand, restrictions in the EU may continue for a few more weeks as vaccination numbers there continue to lag behind the US & UK.

Some triggers that may change the direction of the market are highlighted below.

Possible Market Triggers

Bullish

  • Delayed crop in Vietnam and Cambodia. Any possible impact of La Niña on the crop.
  • Supply chain disruptions, shipment delays from Vietnam leading to depletion of destination stocks.
  • Demand rebounding in India and China.
  • Increase in vaccination numbers.

Bearish

  • Good crops across West Africa, Vietnam, and Cambodia.
  • Higher raw nut inventory levels in India and Vietnam.
  • Higher freight rates affecting the ability to pay higher prices by the processors.
  • Any delay in vaccinations in certain geographies..

Please take care and stay safe and healthy

If you have any comments or suggestions, please write to me at mayank.jhanjhri@olamnet.com or message me on LinkedIn.

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