With the inshell crop season complete in the northern hemisphere, the focus has now shifted towards kernels. After a slight correction in May, prices have been moving up steadily. There is now a growing concern about the COVID-19 situation in Vietnam and its potential impact on the supply chain.
On inshells: The Northern hemisphere crops have been harvested and are slightly lower than last year. We have seen an increase in prices over the last few weeks with demand from India returning. The inshell offers are also limited right now and with the lockdown in Vietnam, there is likely going to be less focus on inshells in the near term. The larger issue in the season continues to be logistical delays and higher cycle times.
On kernels: With the lockdown announced in Vietnam, kernel prices have jumped up sharply over the last couple of weeks. The government of Vietnam has put the entire southern region in a two-week lockdown, as COVID-19 daily cases surpass 4,000. Spot availability is very limited now as there is now a panic to ship the existing backlog as well as advance future shipments. If the current situation continues, then we are likely to see spot shortages at destinations through Q4 as well. Overall demand is projected to be robust in the second half across the US, EU, and Asia.
Processing is back to normal in India with COVID-19 situation stabilizing. Kernel demand is very healthy as large institutional buyers are back in the market to cover for the second half of the year’s demand, especially as they’re now preparing for the festive season.
Some triggers that may change the direction of the market are highlighted below:
Possible Market Triggers
Reduction in processing capacity in Vietnam will likely reduce spot availability of kernels.
Advancement of shipments by buyers will likely put further pressure on spot offers from Vietnam.
Inshells being concentrated with a small group of players and potentially low in-shell availability with processors in Vietnam towards end of Q3.
Continued shipment delays from Vietnam - low spot availability and higher prices at destinations.
Robust demand projections across the US, EU, and China led by low shelf prices and holiday season demand.
Wave 3 of COVID-19 and its potential demand impact in the future.