Cashew Market Update - June 2023
- While entering the tail of the NH crop in-shell season, we see a significant drop in the quality out-turn. With ongoing showers in main harvest regions, farmers couldn’t do a proper sun-drying. The lower demand in recent months forced in-shell traders to store cargo much longer than usual in challenging environments.
- In-shell processors have less of a concern as they covered early season majority of their annual needs within the first and second flush. Still, they also have their challenges as in-shell prices moved significantly lower, which puts pressure on their parities.
- We started hearing increased numbers of renegotiations from in-shell importers in Asia. The main challenges for the in-shell exporters are delayed execution and high moisture/lower out-turn than expected.
- The challenges noticed within the in-shell market can be explained by the lower demand in Kernels for the last 6-9 months. We have seen main destination markets acting with a flashlight system, meaning they buy when they have a need and then straight off the market for some time.
- On one side, destination processors claim demand has come off, while the other side, we started seeing significant promotions on the shelf across the globe. It’s likely a combination of factors where financing/warehousing has become a significant cost picture for the industry and therefore continue from a short position or just simply buy hand-to-mouth.
- WW320 pricing is at a wide range depending on processor type with nearby shipments sub $2,40/lb FOB to $2,60+/lb FOB. Forward demand remains strong, but Kernel processors currently have no appetite to sell far forward in a most likely bottomed-out market.
• De-stocking at main destination markets has made spot availability limited.
• Quality of the kernel arrivals has come off significantly and the industry has started raising red flags to Asian processors.
• Shell realization has come off further and is at 1/3 where it was last year.
• Nearby demand both in in-shell and kernel remains sluggish.
• Consumers remain less interested in luxury items, as uncertainty continues in current recession.
• In-shell demand hasn’t picked up as expected in the second half of the NH crop arrivals.
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