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Cashew Market Update - October 20, 2020

The cashew kernel market continues to be silent with no major buying interest over the last several weeks. Despite the lack of large-scale buying interest, prices continue to remain firm. The reason for firm cashew kernel prices has been firm and out of parity with in-shell pricing over the last few months.

Tanzanian auctions started a couple of weeks back and have established slightly higher than current prices for inshells and, on a parity basis, much higher than today’s kernel pricing. But over the last few auctions, we have seen that farmers have rejected lower prices and hence not all quantities that were available were sold. Also, prices across all auctions were in a narrow band and have remained flat.

One can interpret the auction pricing as bearish as no one bid up the market (which is already at a disparity with kernels) or bullish as the disparity continues.  If most of the Tanzanian crop does sell at the same price, there is a reason for shellers to increase their kernel prices.

How Tanzania’s auctions go from here depends on kernel demand. October through December is usually the peak demand period across the globe with festivals, Chinese New Year, and Holiday season demand. There is a lot of uncertainty due to spikes in COVID-19 and how various parts of the economy open.

Possible Scenarios

Bullish

  • Kernel prices are firm despite lower demand / active buying interest
  • Limited availability of good quality inshells at a reasonable price
  • Firm Tanzania inshell price
  • We are getting into a peak consumption period and spikes in demand can result in spot interest and price increase

Bearish

  • COVID-19 related spikes / lockdowns and their impact on business
  • Excess shipments and inventory at destinations
  • No large interest to bid up Tanzanian inshells so far
  • Overall, there is no shortage of inshells

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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