Cashew Market Update - May 7, 2020
Last week the IVC government declared lower estimates of this year’s cashew crop by about 10%. This is also in line with our expectations, as we have already been reporting this over the last several weeks.
We have seen improvements in the COVID-19 related movement restrictions in West Africa. As a result, the pace of inshell arrivals has improved slightly. We are seeing farmers able to trade their harvest and some of the farmers who were holding stocks have started selling due to the ease of restrictions and price increase seen recently in inshells. There are concerns on how well farmers are storing the inshells and if there is quality deterioration due to storage.
In Vietnam we have seen restrictions lifted on several small processing units, which should result in better availability of kernels. However, the fact remains that West African shipments are lower than last year, and we may still have a situation of spot inshell squeeze in Vietnam if the current pace of kernel shipments continue.
Cashew demand has been steady across the main markets. We must see how India responds to the current inshell and kernel markets and if there is any buying interest in the domestic market post-reopening. Indian demand and Indian processors ability to pay for local inshell will determine cashew prices in the long run.
Possible Scenarios
Bullish
- IVC has confirmed a short crop
- The quality of inshells could be deteriorating
- Vietnamese processors running out of good quality inshells and firm inshell prices
- Supply chain disruptions in inshells could lead to delayed availability of inshells to processors
- Consumption across western markets is still reasonable
Bearish
- The state of the economy and job losses… will nut consumption remain at current levels despite job losses?
- Chinese buyers are still not active in the market – there has been no real restocking demand
- Indian economy is slowing significantly and will impact cashew demand – India is the largest market for cashew kernels
Please take care and stay safe and healthy
If you have any comments or suggestions, please write to me at ganesh@olamnet.com or message me on LinkedIn.
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