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Cashew Market Update - April 15, 2020

Many cashew producing countries continue to be under lockdown or are sheltering in place. This has resulted in restricted movement of inshells from the farms to trade centers and lower availability of inshells to trade.

Vietnam cashew factories continue to operate as usual, so far. Vietnamese cashew processors have seen their local supply of inshells from Cambodia and Vietnam dry up and they are now actively looking for West African inshells to arrive. As a result of lower inshell availability, we have seen inshell markets firm up by 10 to 15% in the last week, with very limited selling interest. It appears that inshell prices have, at least for now, found a bottom.

Kernel prices have also firmed up and many Vietnamese shellers withdrew their kernel offers. We feel the next few weeks to months will see lower kernel availability and firmer prices, at least until a large part of West African inshells reach Vietnam.

Indian markets are closed as the government extended the lockdown in many places until the end of April. Some factories could restart in a small way in India, and some packing and shipping operations could resume. The Indian market is also the largest market for kernels, and we have not seen much demand for cashews.

China has resumed some kernel buying from Vietnam. We have also seen active buying interest for cashews from the Middle East as preparations are on for Ramadan.

Possible Scenarios

Bullish

  • Vietnamese processors could run out of good quality inshells
  • Inshell prices are firming up and quality of inshells are dropping
  • Supply chain disruptions in inshells could lead to delayed availability of inshells to processors.
  • Kernel supply has reduced, and kernel prices are firming up
  • The IVC crop seems to be lower than last year

Bearish

  • Limited buying activity in US market
  • If kernel demand remains poor the current bullish inshell price trend could reverse
  • With continued economic impact of COVID-19, it is difficult to expect robust consumption growth

Please take care and stay safe and healthy

If you have any comments or suggestions, please write to me at ganesh@olamnet.com

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